THE WORLD BANK

A Decade of
Action in Transport
An Evaluation of World Bank Assistance to the
Transport Sector, 1995–2005
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 W O R L D B A N K I N D E P E N D E N T E V A L U A T I O N G R O U P

A Decade of Action
in Transport
An Evaluation of World Bank Assistance to the
Transport Sector, 1995–2005

2007
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Contents
vii Abbreviations
ix Acknowledgments
xi Foreword
xiii Executive Summary
xix Management Response to IEG Recommendations
xxiii Chairperson’s Summary: Committee on Development Effectiveness (CODE)
xxvii Statement of the External Advisory Panel
3 1 Study Rationale, Objectives, and Organization
3 Role and Nature of Transport
5 Evaluation Rationale, Objectives, and Organization
5 Evaluation Method
9 2 Global Trends, Bank Strategy, and Sector Outcomes
9 Global Transport: Trends and Issues
11 Foundations and Relevance of the Bank’s Current Transport Strategy
13 Update of Sector Priorities
14 Sector Outcomes
19 3 Bank Support to the Transport Sector
19 Trends in Bank Lending to Transport
22 Overall Project Performance
23 Modal Comparisons
27 Regional Lending Trends
29 Nonlending Assistance
37 4 Promoting Private Sector Involvement
37 International Trends in Privatization
39 Bank Performance in Encouraging Private Sector Involvement
43 Overall Transport Performance
47 5 Road Maintenance, Institutional Development, and Environmental Protection
47 Maintaining the Assets
51 The Importance of Good Governance
54 Protecting the Environment
59 6 Transport and Poverty
59 Rural Transport and Poverty
61 Urban Transport and Poverty
63 African Transport and Poverty
A DECADE OF ACTION IN TRANSPORT

69 7 Internal Bank Performance Factors

69 Project Preparation
69 Project Supervision
70 Lending Instruments
70 Results Measurement
72 Transport Sector Staffing
75 8 Findings, Lessons, and Recommendations
75 Findings and Lessons
80 Recommendations
83 Appendixes
85 A: Study Logic and Statistics
115 B: Background Paper Summaries
141 C: MIGA Support for Transport Projects
147 D: IFC’s Experience in the Transport Sector
155 E: Bank Transport Staff Interview Results
161 F: Stakeholder Interviews
163 G: Bank Documents and Transport Sector Board Activities
165 Endnotes
171 Bibliography
Boxes
30 3.1 Sub-Saharan Africa Transport Policy Program
41 4.1 Mobilizing Private Finance for Road Development in China
50 5.1 Performance-Based Contracting of Road Maintenance in Argentina
55 5.2 Lessons on Reducing Urban Pollution
60 6.1 Improving Road Access in Rural Lesotho and Ghana
62 6.2 Bangabhandu Jamuna River Bridge, Bangladesh—How Transport
Infrastructure Can Stimulate Development
65 6.3 The World Bank Group Africa Action Plan
66 6.4 Lesotho Road Rehabilitation Project—Limited Capacity Impedes Reform
Figures
xv ES.1 Private Sector Investment in the Transport Sector
13 2.1 Trends in IBRD/IDA Lending by Major Sector Groups, 1991–2004
15 2.2 Private Sector Investment in Transport Projects in Developing Countries,
1990–2005
20 3.1 Trends in IBRD/IDA Commitments for Transport, Fiscal 1995–2005
20 3.2 Trends in Average Project Size, Transport Sector Projects versus All Other
Projects, Fiscal 1995–2005
27 3.3 Trends in IBRD/IDA Commitments for Transport by Region
28 3.4 IEG Ratings for Outcome, Sustainability, and Institutional Development
(Approval Year Fiscal 1995–2006)
Tables
21 3.1 IBRD/IDA Commitments for Transport ($ billions): Share of Top 5
and Top 10 Countries, Fiscal 1995–2000 and Fiscal 2001–06
22 3.2 IEG Ratings of Overall Project Outcome, Institutional Development,
and Sustainability by Exit Year, Fiscal 1992–2006

iv
 CONTENTS

23 3.3 IBRD/IDA Commitments for Transport ($ billions): Distribution by

Transport Mode, Fiscal 1995–2000 and Fiscal 2001–06
24 3.4 Transport Sector Board Projects, Fiscal 1995–2006: Analysis of
Performance by Physical Infrastructure Objectives
31 3.5 Count of Research Papers, Sector Reports, Publications, and Notes/
Newsletters: Transport Sector versus Other Sectors, 1995–2005
31 3.6 Economic and Sector Work Strategy Documents by Region, 1995–2005
40 4.1 Analysis of Performance by Private Sector Development Objectives,
Transport Sector Board Projects, Fiscal 1995–2006
54 5.1 Analysis of Performance by Institutional Development Objectives,
Transport Sector Board Projects, Fiscal 1995–2006
64 6.1 Distribution of Urban Projects and Components, Closed and Active
(1995–2005)
72 7.1 Average Economic Rate of Return of Transport Projects, Approval Years
1995–2005

v
ABBREVIATIONS

AAA Analytical and advisory assistance

BOT Build, operate, and transfer project
CAE Country Assistance Evaluation
CAS Country Assistance Strategy
CREMA Contratos de Recuperación y Mantenimiento (Argentina)
DBFO Design, build, finance, and operate project
EIB European Investment Bank
ERR Economic rate of return
ESSD Environmentally and Socially Sustainable Development (Network)
ESW Economic and sector work
EU European Union
GDP Gross domestic product
HDM-4 Highway Development and Management System
IBRD International Bank for Reconstruction and Development
ICAO International Civil Aviation Organization
ICR Implementation Completion Report
IDA International Development Association
IEG Independent Evaluation Group
IFC International Finance Corporation
IFI International financial institution
IMF International Monetary Fund
IR Indian Railways
JNP Jawaharlal Nehru Port
km Kilometers
LICUS Low-income countries under stress
MDG Millennium Development Goal
MIGA Multilateral Investment Guarantee Agency
MRT Ministry of Roads and Transport (Ghana)
NMT Nonmotorized transport
OECD Organisation for Economic Co-operation and Development
OED Operations Evaluation Department (Changed its name to Independent
Evaluation Group [IEG] in December 2005.)
PCD Provincial Communication Department (China)
PPAR Project Performance Assessment Report
PPI Public-private infrastructure
PPP Public-private partnership
PRSP Poverty Reduction Strategy Paper
QAG Quality Assurance Group
SSATP Sub-Saharan Africa Transport Policy Program
SSIU Sector Strategy Implementation Update

vii
A DECADE OF ACTION IN TRANSPORT

SWAp Sector-Wide Approach

TANROADS Tanzanian Road Agency
TATF Technical Assistance Trust Funds (IFC)
TAZARA Tanzania-Zambia Railway Authority
TRC Tanzania Railway Corporation
UN United Nations
WBI World Bank Institute
WDR World Development Report
WHO World Health Organization

Note: $ = U.S. dollars throughout the report unless otherwise noted. World Bank fiscal year
July 1–June 30.

viii
Acknowledgments
The study would not have been possible without
the contributions and support of a great many
individuals. Peter Freeman was the evaluation
manager and the main author. Ramachandra
Jammi and Kavita Mathur compiled and analyzed
the huge amount of transport-related material
and were involved with all stages of the report.
Mr. Jammi in particular prepared both the litera-
ture and portfolio reviews in collaboration with
Ms. Mathur and was involved in the case study
of Indian transport, organizing a workshop in
New Delhi. William Hurlbut and Heather Ditt-
brenner edited the report, and Romayne Pereira
provided administrative support. Country case
studies were prepared by Hernan Levy (India
and Tanzania) and Gabriel Siri (Brazil). In each
of these countries a local consultant was also
commissioned to conduct stakeholder inter-
views with a wide range of interested parties. The
interviews and subsequent analyses were carried
out by Abdul Awadh (Tanzania), Cesar Cavalcanti
(Brazil), and Harcharansingh Jamdar (India).
Background studies were also prepared by
Mr. Levy (road maintenance and road funds) and
Christopher Willoughby (public and private sec-
tor financing).
Director, Independent Evaluation Group, World Bank: Ajay Chhibber
Manager, Sector, Thematic, and Global Evaluation: Alain Barbu
The contributions by the Multilateral Investment
Guarantee Agency and the International Finance
Corporation, in appendixes C and D, respectively,
are gratefully acknowledged. It is appropriate to
clarify, however, that this was not a full joint study.
An advisory panel of external experts reviewed
drafts and served as a sounding board for the
recommendations. Thanks are due to panel mem-
bers Viorica Beldean (Romania), Prof. Ali Huzayyin
(Egypt), Pierre Laconte (Belgium), and Henning
Lauridsen (Norway).
Extensive and thorough peer review comments
were received from Prof. Kenneth Gwilliam on the
entire work. Useful comments and information
were provided on the sections on road funds and
maintenance issues by Nils Bruzelius, Prof. Ian
Heggie, and Gunter Zietlow. The willingness of
staff at the Inter-American Development Bank
(undertaking a transport sector evaluation in
Latin America) to exchange ideas and information
is also gratefully acknowledged; special thanks
for this are due to José Pires and Felipe Targa.
Finally, the generous financial support of the Nor-
wegian Agency for International Development
(Norad) and the suggestions of Agnete Eriksen are
gratefully acknowledged.
Director-General, Evaluation: Vinod Thomas
Evaluation Manager: Peter Freeman
ix
 Foreword

T
his Independent Evaluation Group (IEG) study evaluates the per-
formance of the World Bank’s support for the transport sector during
the period 1995–2005. The findings are intended to feed into the revi-
sion of the Bank’s transport strategy. The analysis is based on a portfolio of 642
projects involving transport, of which 284 have closed and been evaluated by
IEG. In addition, the report draws on staff and stakeholder interviews, an ex-
tensive literature survey, and a review of sector analytical and advisory work.
The report coincides with a period when Bank overuse. All these elements exacerbate the neg-
commitments for transport infrastructure are ative impacts of transport investments. Troubling
growing and when the transport sector faces es- issues include environmental damage, energy
calating demands to address emerging issues of efficiency, and implications for climate change,
an increasingly global nature. Transport experts traffic congestion, and transport safety. There
worldwide face a growth phenomenon fuelled are also questions relating to affordability and
by expanding human and vehicle populations the logistical challenges of effective multimodal
and led by intensified demand for the movement transportation.
of goods. This movement is stimulated by glob-
alization and trade liberalization. People’s travel Historically, the Bank’s transport sector activities
needs are also expanding rapidly, as rising in- have been well managed and effective. Past efforts
comes lead to a desire for greater mobility. have focused heavily on intercity highway con-
struction and rehabilitation. The Bank has made
The challenge for development is to support this important progress in encouraging private sector
huge growth, but at the same time to ameliorate contracting, especially of maintenance activities.
the negative socioenvironmental impacts of trans- In contrast, there has been more modest success
port. The sector must also look for new oppor- with institution building and ensuring infra-
tunities for more sustainable solutions than in structure sustainability.
the past. Overlaying the general scenario of eco-
nomic growth is a second phenomenon of rapid Past successes notwithstanding, the time has
urbanization, congestion, pollution, and resource come to reassess priorities and develop a revised

xi
A DECADE OF ACTION IN TRANSPORT

agenda that better meets emerging challenges.
The evolving transport paradigm will require pro-
grammatic, cross-cutting, and multisectoral ap-
proaches. In this regard, the recent merging of the
Infrastructure and the Environmentally and So-
cially Sustainable Development Networks in the
Bank presents opportunities for getting the most
from linkages across these areas. This new para-
digm should enable the transport sector to bet-
ter contribute to the sustainability of Bank efforts
to improve the welfare of the people in developing
countries.

Vinod Thomas
Director-General
Evaluation

xii
Executive Summary

T
hroughout the past decade transport projects have played a pivotal role
in the support of economic development and poverty alleviation. This
evaluation assesses the Bank’s activities in transport during the period
1995–2005 as well as its preparedness to meet emerging challenges. It con-
cludes that past performance has been well managed and effective, especially
for intercity highway construction and rehabilitation, that the Bank’s ap-
proach to transport contributed to private sector development particularly
though private contracting of maintenance, that project outcome ratings have
shown a steady improvement since the early 1990s, and that key elements of
the current strategy—sustainability, private sector involvement, and urban strat-
egy—remain relevant today.
However, the evaluation also concludes that trans- lion. In developing countries, much of this growth
port must now focus more attention on con- will be urban; the number of cities exceeding 1 mil-
fronting cross-cutting issues such as traffic lion inhabitants is well on track to surge from
congestion, environmental damages, safety, effi- 268 in 2000 to 358 by 2015. This expansion, cou-
ciency, and affordability. pled with continuing globalization and trade lib-
eralization, is expected to accelerate significantly
This focus will necessitate more innovative, multi- the demand for the transportation of both peo-
sectoral approaches to resolve these complex ple and goods.
and urgent country and global concerns. The
Bank may have to reconsider its priorities to fully The motor industry, for example, may have reached
address these challenging social, political, and maturity in the developed markets of North Amer-
environmental issues and shift resources to en- ica, Europe, and Japan, but globally it is poised for
suring efficient multimodal transport, improved huge expansions, led by the motorization of China
rural linkages, and better urban transport. and India. Within a few years, China will replace
Japan as the second-largest national market after
Over the next 35 years 2.5 billion people will be the United States; over the next 20 years, more cars
added to the current world population of 6.3 bil- may be built than in the 110-year history of the

xiii
A DECADE OF ACTION IN TRANSPORT
industry. Similar growth is expected in the aviation
and maritime industries; only railway expansion is
likely to be at a slower rate.
Although such vibrant growth may appear wel-
come, the scenario has a darker side as well.
Today’s concerns about high fuel prices will in-
evitably be magnified. Road transport already ac-
counts for nearly a quarter of the man-made gases
contributing to climate change. Pollution, noise,
ugliness, and wasted time from traffic conges-
tion also impose substantial societal costs. Marine
oil pollution, crowded skies, and security issues
also add to an increasingly dismal global transport
outlook.
In developing countries the problems of con-
gestion and pollution are further compounded by
poor road safety, which has led the World Health
Organization to declare road safety an interna-
tional public health issue. Just over a century
after the first motor vehicle-related traffic death
in 1896, 1.2 million people are killed on the roads
annually and 50 million more injured. More than
85 percent of these victims are from developing
countries.
Public transport offers clear advantages for re-
ducing congestion and pollution and for increasing
safety. But progress has often been disappointing,
because private vehicle users rarely pay the true
costs they impose on society, thus encouraging
urban sprawl. At the same time, decentralized
cities with lower population densities and long trip
distances increase the cost of providing public
transport. The urban poor, usually residing on city
peripheries, tend to become marginalized by a lack
of accessibility. Meanwhile, the rapid growth of
megacities is raising concern about worsening
air quality, the adverse effects of which fall dis-
proportionately on the poor.
The Bank’s Response
Transport accounts for nearly 6 percent of global
gross domestic product. It is thus no surprise
that the Bank has provided more than $30 billion,
or well over 15 percent of its total lending com-
mitments, in support of transport projects during
the past decade. In the past 5 years there has
xiv
been a scaling up of transport investment as the
link between poverty reduction and transport
has become better understood. It is therefore
timely that the Bank is now updating its strategic
approach to the sector to address some of the
more menacing impacts of global transport ex-
pansion and can take into account this evaluation,
which includes an assessment of the Bank’s readi-
ness to meet such emerging challenges.
The World Bank’s current transport strategy is
influenced by three key documents. The World
Development Report: Infrastructure for Devel-
opment, published in 1994, promotes an ex-
panded role for competitive markets in transport.
Sustainable Transport (World Bank 1996) focuses
on the need for transport systems to be com-
prehensively sustained—economically, environ-
mentally, and socially. Finally, Cities on the Move
(World Bank 2002a) focuses on the urban aspects
of transport. The three elements—sustainability,
private sector involvement, and urban strategy—
all remain relevant today but require adjustment
and a different approach to meet the challenges
of the coming decade.
Private Sector Involvement Below
Expectations
Optimism was high in the early 1990s that the
private sector could assume a large part of the
responsibility for funding both transport infra-
structure and services. However, market expec-
tations with respect to infrastructure turned out
to be far too ambitious. After a dramatic decline
during the financial instability of the late 1990s,
when private sector transport projects in devel-
oping countries were seen as too long term and
risky, confidence returned in 2005 (see figure
ES.1). Nevertheless, despite a few early highly
publicized failures, important progress was made
internationally, and successful private concessions
were effected in all modes of transport.
Although the outcome of such private invest-
ment in developing countries has been largely pos-
itive, transport concessions are still most common
in middle-income countries, such as Argentina,
Brazil, China, Mexico, South Africa, and Turkey. In
these countries the volumes of traffic, especially

Figure ES.1: Private Sector Investment in the Transport Sector
25,000
20,000
US$ millions
15,000
10,000
5,000
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: World Bank data.
for toll roads, are more attractive and there is
sufficient public sector capacity to engage with the
private sector. The Bank has nevertheless con-
tinued to encourage private investment even in
lower-income countries; it realized that one suc-
cessful project can still have a huge impact on such
economies.
Port concessions in developing countries have
generally been successful, as in India, the Re-
public of Korea, Mauritius, and Poland. Railway
concessions in general, however, have been
less satisfactory because governments intervene
more often on pricing and labor issues. A Bank-
supported railway concession in Tanzania, for ex-
ample, had overly restrictive bid conditions and
failed to attract private sector interest. Recently,
security has also become an important issue at
ports, airports, and border crossings.
Bank projects featuring private sector conces-
sions have not grown substantially during the
past decade but have seen modest growth in the
International Finance Corporation (IFC). Clients
generally turn to the Bank Group either for ad-
vice or when an investment is perceived as risky.
In recent years, knowledge of how to set up toll-
road concessions has matured, and the Bank is
now able to offer services such as reimbursable
technical assistance and partial risk guarantees.
Where the Bank has supported or facilitated con-
EXECUTIVE SUMMARY
Year
cessions, they have usually been rated satisfactory
or better, for example, roads in China, railways in
Brazil, and ports such as Dar-es-Salaam in Tanza-
nia and Port Louis in Mauritius.
For the foreseeable future, however, the public
sector will continue to be the major owner and
operator of basic transport infrastructure. This is
true especially as the sector is dominated by
roads, which have public good characteristics.
The Bank increased its commitments for public
sector transport projects once it realized that suf-
ficient private sector investment would not be
forthcoming. Evidence from Latin America has
shown that a reduction in infrastructure invest-
ment (including transport) is associated with eco-
nomic growth and that the gap in infrastructure
expenditure relative to East Asia is widening.
The Bank’s most important contribution to in-
volving the private sector has been not in outright
privatization, but through the many road pro-
grams in which it has encouraged private con-
tracting. Also influential has been the abolition of
departmental construction and maintenance and
its insistence on competitive bidding for con-
tracts. It has also had some success in encourag-
ing the establishment of commercially run road
agencies and the creation of road funds to bring
greater stability into financing recurrent road ex-
penditures, especially in Africa.
xv
A DECADE OF ACTION IN TRANSPORT
For railways, many governments are not prepared
to agree to long-term concessions, such as in Mo-
rocco and Romania. The Bank nevertheless has
been able to help improve accountability and
transparency in financing arrangements, includ-
ing openness about subsidization arrangements
for noneconomic services and a greater willing-
ness to divest noncore business components.
Although sustainability has improved, at least as
reflected in Independent Evaluation Group (IEG)
ratings at completion, the current reality is an
understatement of what is required for truly sus-
tainable transport infrastructure. This is because
maintenance tends to have a lower priority for
cash-strapped governments, despite good inten-
tions, and because many countries are politically
unstable—civil unrest can quickly undo all the
good work that has gone before.
Mixed Institutional Progress
Effective governance and capacity building are
integral to ensuring sustainability. The transport
sector is certainly not immune from corrupt prac-
tices, especially in large construction projects.
Although the sector’s adherence to Bank guide-
lines for procurement and competitive tendering
partially constrains the scope for corruption, the
sector has until now lacked an explicit anticor-
ruption strategy.
The Bank has generally had a mixed performance
in helping to strengthen client institutions, with
mostly modest results in low-income countries (es-
pecially in Africa) but better results in middle-
income countries. In this regard, most road agen-
cies and some railway reorganizations ranging
from Ghana to Côte d’Ivoire have demonstrated
greater effectiveness following Bank-supported
technical assistance, but in some other countries
the results have been less favorable.
Training, however, has often been aimed at as-
sisting the immediate project and thus is less
likely to have any broader or sustained impact.
Often, the timing of training interventions has
not been synchronized with the organizational
changes needed to improve public sector per-
formance. Institutional change takes time, and the
xvi
duration of the project intervention is relatively
short. Institutional objectives therefore need to
be more realistic and should be pursued incre-
mentally through a continuing support program
that extends beyond the transport sector itself.
Good Project Performance, Lagging
Monitoring and Evaluation Efforts
IEG transport project ratings have shown steady
improvement since the early 1990s. Good bal-
anced portfolio performance has also been
achieved among other things in large countries
such as Brazil and China and in several smaller
countries, including Latvia, Lao People’s Democratic
Republic, Morocco, Nicaragua, Peru, and Senegal.
The rate of improvement overall, however, is less
favorable when the largest borrowers are excluded;
the concentration of transport commitments in
China and India alone has increased from 31 per-
cent to 40 percent of all transport lending over the
past decade.
The good economic rates of return and outcome
ratings are noteworthy, but the sector has lagged
in developing practical performance indicators for
the sector. Progress with monitoring and evalua-
tion is also frequently hampered by a lack of base-
line information.
Performance Difficult to Sustain
The volume of commitments is 40 percent higher
today than it was in 2000. Greater productivity in
the financial sense has been achieved, partly be-
cause of the large contingent of similar intercity
highway projects and the availability of tools for
rapid appraisal. Other factors have been the move
toward programmatic lending and increased proj-
ect size. But if transport is to effectively address
the emerging issues, the question of staff skills
needs attention.
There is evidence from staff interviews and Qual-
ity Assurance Group reviews that transport proj-
ects are particularly affected by perverse incentives
against staff undertaking highly beneficial yet
complex projects with valid safeguard damages
related to major resettlement, environmental is-
sues, and the presence of multiple stakeholders.
In addition, there has been a relative neglect of

knowledge dissemination and sector research,
the latter being significantly lower than would be
expected from a sector with such a large project
portfolio.
Because the Bank provides just 2 percent of total
infrastructure spending in developing countries,
it needs to try, wherever possible, to make a dif-
ference by demonstrating new approaches. Typ-
ically this will involve a significant increase in time
and effort, which may mean greater selectivity of
new projects. Although valuable analytical and
advisory assistance has been carried out in several
countries, the effort is spread rather thin, and
awareness of this high-quality work is often not
shared as widely as is warranted. More focus on
such work is clearly required as an input into fu-
ture Country Assistance Strategies (CASs).
Urban Transport, Rural Roads,
and Multimodal Transport
Increasingly Relevant
The composition of the transport portfolio (in
which roads account for nearly 80 percent of
Bank transport commitments) is a cause for
concern, if the sector is to remain relevant. High-
ways will continue to be important, and the level
of support should be customized by Region and
country, but other transport modes and themes
are growing in both importance and relevance. It
will be essential to see transport opportunities
with a multimodal setting of integrated urban
and rural concerns.
Multimodal projects aimed at removing internal
as well as cross-border trade barriers can signifi-
cantly reduce freight costs. They can help im-
prove the affordability of consumer goods and raw
materials for the productive sectors. Linked to this,
more projects of a logistical nature involving rail
and container terminals should be anticipated. The
relevance and impact of multimodal approaches
is likely to increase.
There are also likely payoffs to projects address-
ing complex urban issues, including congestion,
safety, and pollution; projects such as the air qual-
ity management projects in Mexico City and Dhaka
and the assistance to China in developing insti-
EXECUTIVE SUMMARY
tutions for sustainable urban transport will in-
creasingly be needed. But the number of such
projects financed by the Bank in recent years has
fallen slightly rather than increasing, as one would
expect. A major constraint is lengthy preparation
time, and the lack of support and incentives for
staff to get involved in more intricate projects is
another factor. The Bank’s current restrictions
on subsovereign lending are also affecting de-
mand for urban transport projects.
Issues of greater rural linkages, rural productiv-
ity, and environmental management are likely to
be of growing importance for poverty alleviation.
Recently an indicator was developed to measure
accessibility (important for the Millennium De-
velopment Goals, addressing freedom from
hunger and better health). There now can be a
much more informed debate about the relative
priority of transport improvements when prepar-
ing CASs.
Emerging Challenges
The Bank’s existing transport strategy, with its
focus on sustainability, urban transport, and the en-
couragement of greater private sector involve-
ment, remains broadly valid. But clean, affordable,
and safe transport are important challenges for the
coming decade. Transport has a crucial role in
helping resolve the nexus of issues associated
with energy, land use, urbanization, and climate
change.
Affordability concerns not only the rural and ur-
ban poor, but also freight economy aimed at im-
proving competitiveness and stronger economic
growth. This clearly cuts across all transport modes
and services. Greater emphasis on safety also can
be strongly justified. It is predicted that by 2020
road accidents will become the third-largest con-
tributor to the global burden of mortality and in-
jury. Bank-financed projects have until recently
rarely addressed road safety holistically. A revised
approach involving comprehensive multisector
projects covering education, police, health, pub-
lic works, and other departments is under devel-
opment. Pedestrians and nonmotorized transport
users have been found to be especially vulnerable
in developing urban areas.
xvii
A DECADE OF ACTION IN TRANSPORT
Especially in the larger cities, air quality is a seri-
ous concern as the number of motor vehicles
continues to grow rapidly, worsening the volume
of emissions. Increased support to urban trans-
port will provide opportunities to explore re-
ducing long-term energy demand through traffic
management, traffic pricing, limits on the use of
private automobiles, and greater support for mass
transit systems and public transport in general.
The Bank may make increased use of funding
sources such as the Global Environment Facility,
the United Nations Environment Program, and car-
bon finance initiatives in future years to tackle
some of these important developments.
Yet this evaluation shows that past Bank experience,
with its relatively narrow, albeit successful, pri-
mary focus on roads, will be insufficient to provide
for the Bank’s future response to these emerging
challenges. Transport is developing into a complex
multisectorial business that will require expertise
from many different disciplines. The pace of change
is also accelerating, and the next generation of
projects is expected to have a much more urban
focus. Although the demand for highways will re-
main the core business, it is anticipated that the
Bank’s clients will increasingly seek support for
more complex projects and that this will gradually
lead to a significant redeployment of resources
and a reexamination of priorities. This can be en-
hanced by the recent merging of the Infrastructure
and the Environmentally and Socially Sustainable
Development Networks. The new priorities will
require greater focus and innovation to ensure
continued Bank relevance. A systematic evalua-
tion of the recent experience with multidonor
programmatic lending initiatives such as Sector-
Wide Approaches (SWAps) is expected. In Africa an
evaluation of the outcome of the unique Sub-
Saharan African Transport Policy Program (SSATP)
will also be important to refining future strategy.
xviii
Overall, the sector is at a crossroads, where it has
a good window of opportunity to attain a higher
level of relevance and offer a better level of sup-
port to its clients.
Recommendations to Bank Management
• Ensure that the focus of the Bank’s transport
operations goes beyond intercity highways
and gives more attention to issues of growing
urgency, including air pollution, traffic con-
gestion, safety, affordability, and trade. This
could entail a trade-off between a portion of tra-
ditional highway business and the newer, more
complex challenges.
• Prepare a Bank Group transport strategy with
a sixfold emphasis: (i) greater attention to air
and water pollution and realizing environmental
gains; (ii) achieving greater synergies across
relevant sectors—building on the merging of
the Bank’s Environmentally and Socially Sus-
tainable Development and Infrastructure Net-
works; (iii) enhancing knowledge sharing and
analytical and advisory services and their con-
tribution to country strategies; (iv) continuing
to support private sector participation through
close coordination among the Bank, IFC, and
the Multilateral Investment Guarantee Agency;
(v) increasing attention to governance and cor-
ruption issues; and (vi) redeploying staff and
budget resources accordingly.
• Build up the sector’s monitoring and evaluation
efforts and align them with the new strategy, in-
cluding through (i) the development over the
next year of relevant intermediate indicators ap-
plicable to the broad range of projects; (ii) the
launch of an enhanced program of rigorous
impact evaluations for selected programs; (iii)
a comprehensive self-evaluation of the experi-
ence with SWAps within 3 years; and (iv) an in-
dependent evaluation of the SSATP program
within 2 years.
Management Response to
IEG Recommendations

M
anagement expresses its appreciation to the Independent Evaluation
Group (IEG) for the constructive suggestions put forward in this eval-
uation. Management notes that in general the review is compre-
hensive and presents a well-balanced, thoughtful, and fair picture of sector
achievements.
Introduction tracting from the overall appreciation manage-
Management notes the overall positive findings ment has for the quality and completeness of
from the review. Among the review’s important the IEG review.
contributions are (a) the appropriate priority and
prominence given to safety and environmental is- Management Comments
sues; (b) its observation that although the current Management would first like to note that the IEG
Bank sector strategy foundations remain valid review is timely, as it provides the backdrop for
today, they require a measure of adjustment toward the transport strategy update under preparation
a more sector-interlinked approach, an evolution (the current strategy dates to 1996). These gen-
that the recent network integration process should eral comments cover a variety of issues where
make easier to implement; and (c) its set of rec- management thinks the IEG review might have
ommendations, notably on the need to redeploy gone further in strengthening the analysis or cov-
staff and budget resources in a way commensurate erage and providing more specificity in recom-
to the challenges at hand. mendations, while again acknowledging the
overall quality of the review.
Management agrees with the thrust of these
recommendations and actually feels that the re- Transport at the Core of the Energy, Ur-
view might have gone further. This analysis pro- banization, and Climate Change Agendas
vides the basis to be even more explicit about the and Other Multisector Linkages. The review
future perspectives for the transport business, rightly highlights the central role of transport in
while at the same time fleshing out recommen- the nexus of issues associated with energy use,
dations more specifically—examples are given land use, urbanization, and climate change. The
below. Management’s specific responses are noted review, however, might have further developed
in the Management Action Record. The com- the theme of the transport interface with other
ments set out here should not be taken as de- sectors and thematic areas, such as gender, social

xix
A DECADE OF ACTION IN TRANSPORT
inclusion, and health. It might have shown in par-
ticular how much the Bank’s transport work is ac-
tually already moving more into a multisector
business.
Fiscal Space. Although it is briefly mentioned,
management believes that the review might have
further addressed the issue of fiscal space. Fiscal
space issues tend to disproportionately affect
the transport sector in many countries. There
are important questions around fiscal space and
the problem of undermaintenance of transport-
related assets and, ultimately, the potential for
foregone competitiveness, sustainable growth,
and poverty reduction.
Greater Differentiation across Review
Periods. The review could have been more ex-
plicit in differentiating across time periods, based
on the level of corporate attention given to the sec-
tor. Especially during the middle years of the re-
view period, there were mixed corporate signals
on the overall importance of infrastructure, in-
cluding transport, for the Bank Group’s work,
up to the adoption in 2003 of the Infrastructure
Action Plan (World Bank 2003a). Rebuilding skills
and strengthening the lending pipeline under
the Action Plan took some time, especially in Eu-
rope and Central Asia.
Client Perspective. The review is understand-
ably organized around sector accountability within
the World Bank Group. It may have been useful
in the review to put a greater emphasis on un-
xx
derstanding the client demand side of the busi-
ness. In particular, management believes that it
needs to give great weight in strategy development
to what client countries perceive as the key issues
and what they say they need from the Bank within
their transport sector.
Governance and Anticorruption. Manage-
ment thinks the review could have acknowledged
more strongly the lead role taken by transport to
mainstream and innovate on matters of anticor-
ruption. The anticorruption frameworks set up for
transport projects in the Bank’s East Asia and Pa-
cific Region, for instance, were groundbreaking ef-
forts in this area.
Conclusions
Notwithstanding the comments above, manage-
ment finds this review to be a very useful overview
of the Bank’s performance in the transport sector.
It has served as a reference document for the on-
going strategy update and will continue to do so
during strategy implementation. It reinforces man-
agement’s views of the importance of further link-
ing the Bank’s transport work with other relevant
sectors. That interlinkage is key to leveraging the
transport sector’s contribution to helping coun-
tries achieve their Millennium Development Goals.
Strong support from the Bank on transport and
its interlinkages can help enhance global pro-
ductivity as part of partner countries’ strategies to
increase growth and reduce poverty. Manage-
ment’s responses to IEG’s specific recommenda-
tions are given in the Management Action Record.

Management Action Record
IEG recommendation
1. Ensure that the focus of the Bank’s transport
operations goes beyond intercity highways and gives
more attention to issues of growing urgency, includ-
ing air pollution, traffic congestion, safety, afford-
ability, and trade. This could entail a trade-off between
a portion of the traditional highway business and
newer, more complex challenges.
2. Prepare a Bank Group transport strategy with a six-
fold emphasis:
(i) Paying greater attention to air and water pollution
and realizing environmental gains
(ii) Achieving greater synergies across relevant sec-
tors—building on the merging of the Bank’s Environ-
mentally and Socially Sustainable Development and
Infrastructure Networks
(iii) Enhancing knowledge sharing and analytical and
advisory services and their contribution to country
strategies
(iv) Continuing to support private sector participation
through close coordination among the Bank, the Inter-
national Finance Corporation (IFC), and the Multilat-
eral Investment Guarantee Agency (MIGA)
(v) Increasing attention to governance and corruption
issues
(vi) Redeploying staff and budget resources accordingly.
M A N A G E M E N T R E S P O N S E T O I E G R E C O M M E N D AT I O N S
Management response
Management agrees with the recommendation and its implication, which is at the core
of the transport strategy update now being finalized under the title Safe, Clean, and
Affordable Transport for Development. This implies specific enhancements to sector
activities to promote increased road safety and appropriate policy response to linkages
among transport, energy efficiency, vehicle emissions, short-term public health impacts,
and long-term greenhouse gas outcomes, and to overcome physical or service quality
transport bottlenecks to regional and international trade in goods and services. How-
ever, this evolution, already under way, should not be at the expense of support for
high-return and in-demand highway operations.
Management agrees with the recommendation and will address it as follows:
(i) The Transport Strategy Update will spell out the necessity to widen the application
of key environmental issues and mainstream them into the lending portfolio.
(ii) The sector will continue to strengthen coordination between transport profession-
als and other Bank Group units in all relevant areas such as urban planning, rural
development, energy, gender, health and education, private sector participation, trade,
and transport facilitation.
(iii) The Transport Sector Board will encourage concentration of resources to obtain max-
imum impact by a series of Transport Flagship Reports designed to provide policy and
practical guidance while maintaining operational application for development effec-
tiveness. Also, to provide better support to countries preparing poverty-reduction
strategies and Bank country teams preparing Country Assistance Strategies based
on those strategies, the Transport Sector Board will lead the preparation of specific
guidelines on how to address transport sector issues in public expenditure reviews.
And to help scale up urban transport operations, the Transport Sector Board will lead
the production of operational guidelines on how to implement the vision spelled out
in Cities on the Move.
(iv) The update to the sector strategy will reconfirm the continuation of the ongoing
collaboration both within Bank teams and with IFC and MIGA units to make the most
of each entity’s advantage in mobilizing the appropriate private sector skills and
resources in support of sustainable transport development operations.
(v) Special attention will be given to working across infrastructure sectors to reduce
corruption risk in Bank-financed projects, while supporting wider country initiatives to
reduce corruption in the transport sector as a whole, and to producing sector-based
operational guidelines to enhance project resilience to corruption.
(vi) The Environmentally and Socially Sustainable Development Network will lead a
strategic staffing and budget review for transport to make the most of network inte-
gration, taking into account the skills mix needed under the updated strategy and
reflecting operational demand.
(Table continues on next page)
xxi
A DECADE OF ACTION IN TRANSPORT
Management Action Record (continued)
IEG recommendation
3. Build up the sector’s monitoring and evaluation
efforts and align them with the new strategy, includ-
ing through:
(i) The development over the next year of relevant
intermediate indicators applicable to the broad range
of projects
(ii) The launch of an enhanced program of rigorous
impact evaluations for selected programs
(iii) A comprehensive self-evaluation of the experience
with Sectorwide Approaches (SWAps) within three
years
(iv) An independent overview of the Sub-Saharan
Africa Transport Policy (SSATP) program within two
years.
xxii
Management response
Management agrees with this recommendation, as progress and accountability in trans-
port and development require more effort to improve measurement of the performance
of transport systems, of the results of Bank-financed transport projects, and of the impact
of alternative transport policies.
Specifically:
(i) The transport anchor is leading the development of transport results indicators, both
at the sector and project level; these will be implemented across projects and subsectors.
(ii) As part of the Development Impact Evaluation Initiative, in collaboration with the
Development Economics Department, the transport sector will pilot impact evaluations
of selected rural transport operations.
(iii) Management agrees and will plan accordingly, because increasing Bank transport
lending made through programmatic approaches is one of the proposed priorities of
the updated transport strategy.
(iv) Management agrees and will plan accordingly in coordination with SSATP donors
and partners.
Management will consider all of its agreed actions complete after the discussion by
Executive Directors of the transport strategy update, the launching of the pilot rural
transport impact evaluations, and the self-evaluation of SWAps. The SSATP program
is a partnership, so management’s commitment is to encourage and support partners
to undertake the recommended action. Management will report on implementation
results in the context of the sectoral component of the planned regular operational results
reports.
Chairperson’s Summary:
Committee on Development
Effectiveness (CODE)

O
n February 14, 2007, the Committee on Development Effectiveness
(CODE) met to discuss A Decade of Action in Transport: An Evalu-
ation of World Bank Assistance to the Transport Sector, 1995–2005,
prepared by the Independent Evaluation Group (IEG), and the draft man-
agement response. A statement of the external advisory panel on the IEG re-
port was circulated as a background document.

Summary of the Evaluation Report Summary of Draft Management Response

Transport projects have accounted for more than
$30 billion of the International Bank for Recon-
struction and Development/International Devel-
opment Association’s commitments during the
past 10 years, with a further $1.9 billion commit-
ment by the International Finance Corporation
(IFC). IEG provided the following recommenda-
tions to Bank management:
• Expand focus of operations beyond intercity
highways and rural roads.
• Prepare a Bank Group transport strategy with
a sixfold emphasis: environmental impact, syn-
ergies across sectors, knowledge sharing and
analysis, private sector role, governance, and
redeploying staff and budget resources.
• Build up the sector’s monitoring and evaluation
efforts.
Management agreed with the thrust of IEG rec-
ommendations. Management also felt that the re-
view might have gone even further in some areas
such as the interface with other sectors and the-
matic areas, such as gender, social inclusion, and
health; fiscal space; greater differentiation across
review periods; and client perspective. Many of
these issues are at the core of the update of the
transport strategy that is being finalized under
the title Safe, Clean, and Affordable Transport for
Development.
Overall Conclusions. The Committee mem-
bers commended IEG for a “very useful, timely,
and comprehensive evaluation” [words taken from
the Executive Directors’ written statements]. The
Committee also commended the transport sector
staff for their hard work, and also for the high

xxiii
A DECADE OF ACTION IN TRANSPORT
efficacy and developmental relevance of their
efforts. Members appreciated staff comments
on Regional experience in Latin American and
the Caribbean and Africa. There was broad en-
dorsement of the key findings of the review and
management’s proposed actions, including: (1)
expanding work beyond traditional intercity road
construction to address emerging needs; (2) re-
iterating the need for having an integrated Bank
Group (including IFC and the Multilateral Invest-
ment Guarantee Agency [MIGA]) transport strat-
egy with a sixfold emphasis; and (3) reaffirming
stronger monitoring and evaluation. Several speak-
ers also reiterated the importance of listening to
clients and taking into account regional approaches.
The private sector role elicited a wide range of
views. Some speakers would have liked the review
to have covered in more detail the effect of the
merger of the infrastructure and private sector de-
velopment sectors in the mid-1990s that had im-
portant implications for the present.
Next Steps. The IEG findings and CODE dis-
cussion are intended to feed into the ongoing
revision of the Bank’s transport strategy under the
title Safe, Clean, and Affordable Transport for
Development. Management has proposed to
discuss the directions of the transport sector
strategy in the upcoming Sector Strategy Imple-
mentation Update.
The following main issues were raised during the
meeting.
Report Issues. The Committee welcomed the
timely IEG review of the experience in the trans-
port sector in terms of helping the preparation of
the sector strategy update and also in light of the
imminent discussion on World Bank Group strat-
egy and resources. Given the satisfactory per-
formance of transport projects in the last decade,
a member wondered why more investments had
not been made in this sector. He also felt that the
IEG report should have focused on lessons
learned from the merger of the infrastructure
and private sector development sectors, particu-
larly the impact on the infrastructure portfolio.
Focus of Operations. Members endorsed IEG’s
recommendation to expand the focus of opera-
xxiv
tions beyond intercity road construction and to
give more attention to “emerging needs,” includ-
ing increased sophistication of demands in de-
veloping countries. There is a need to broaden the
core business into different types of transport,
including city subway systems, light railways, and
airports to respond to the specific needs of mainly
middle-income countries. However, members also
noted the continued need for traditional high-
ways and road infrastructure, especially in low-
income countries in Africa. Speakers expressed a
diversity of views on whether the primary focus of
Bank work should be on the economic rate of re-
turn of projects, the cost-effectiveness of the trans-
port mode, or the social dimension of transport
projects (for example, the impact on health or gen-
der). Management noted that economically
meaningful transport projects can also provide
social benefits and opportunities to disadvan-
taged segments of the population. IEG also em-
phasized the importance of road safety, because
the cost of road accidents is a heavy burden on
developing countries.
Country Focus. The importance of listening to
the clients was noted, while considering that so-
lutions suitable for middle-income countries with
existing transport infrastructure may not be as ap-
plicable to low-income countries with weaker ca-
pacities and regulatory frameworks. A member
emphasized the need for an integrated country
approach before adopting different transport
modes; transport is a national development issue
with multisectoral dimensions. In this regard,
members stressed the importance of being con-
sistent with varied Regional and country needs.
Management said that countries’ demands will
be supported depending on the level of transport
development and specific needs at the local and
Regional level. However, the same policy prin-
ciples and ways of assessing economic and so-
cial viability will be followed.
Proposed Strategy
Even though the key elements of the current
transport strategy (sustainability, private sector
development, and urban transport) remain rele-
vant, members generally endorsed IEG’s Bank
Group transport strategy proposal for a sixfold em-
phasis and made the following specific comments:
 C H A I R P E R S O N ’ S S U M M A R Y: C O M M I T T E E O N D E V E L O P M E N T E F E C T I V E N E S S ( C O D E )
• Environmental impact—The current trans-
port projects are more complex because of
environmental impact, including pollution and
energy, but their costs are higher.
• Synergies across sectors—Cross-cutting issues
such as traffic congestion, road safety, afford-
ability, and urban and rural development should
be taken into account in project design.
• Knowledge sharing and analysis—The Bank
should promote more analytical work, research,
and dissemination and document lessons
learned from projects. The public sector has a
role to play in knowledge sharing, including on
safety and environmental and strategic inte-
gration of transport modes.
• Governance—The Bank needs to assist its
clients in strengthening institutional capacity, in-
cluding the use of country systems in transport
projects. In this vein, one member stressed the
importance of national systems’ budgeting for
maintenance of transport infrastructure. Fiscal
space and political economy should be consid-
ered in the design of the transport system (for
example, roads, railways, and subways).
• Role of private sector—There is considerable
scope for increased private sector involvement
in the transport sector. However, the public sec-
tor can play different roles, from investor of
transportation infrastructure to regulator. Also,
consortia or public-private partnerships can
play different roles in approaching social util-
ity, externalities, or market failure. Manage-
ment clarified that transport infrastructure
investment is predominantly supported by the
public sector while transport services are gen-
erally provided by the private sector.
• Redeploying staff and budget resources—Ap-
propriate resources, staff skills, and incentives
should be in place to address the challenges of
implementing the new sector strategy. Sug-
gestions were made on implementation issues
such as the need for assessing available and
needed resources, hiring of local consultants
or academics, and deepening the decentral-
ization of transport sector work.
World Bank Group Strategy. Speakers stressed
the need for having an integrated Bank Group-
wide transport sector strategy capitalizing fully on
the synergies and competencies of different units
within the Bank, IFC, and MIGA. They felt the Bank
should play a lead role assisting countries in the
improvement of the transport sector, including ad-
visory services and technical assistance, while as-
suring country ownership. The potential conflict
of interests for the Bank Group, which offers ad-
vice to the authorities on transportation plan-
ning, but at the same time is also an investor in
transport infrastructure, was raised. Members
also stressed the importance of greater coordi-
nation with international partners in the design,
cofinancing, and supervision of projects. Man-
agement noted that the Bank has a role to play
in the improvement of project design, includ-
ing issues such as safety or the environment.
Management has also considered partnerships
with other international financial institutions
and donors.
Monitoring and Evaluation Efforts. Mem-
bers concurred with IEG’s recommendation to
strengthen monitoring and evaluation, including
addressing more decisively poverty indicators,
for example, access and affordability; and the de-
velopment of more indicators, for example, to
assess the development impact of improved trans-
port infrastructure and services and a compre-
hensive self-evaluation of programmatic lending
approaches. This will also entail building moni-
toring and evaluation capacity in the Bank and its
clients.
Challenges Ahead
Some members commented on the trade-offs for
refocusing the Bank’s assistance toward the new
challenges identified by IEG. The importance of
considering the impact of climate change and
natural disasters on transport infrastructure was
also noted. Management indicated that the new
strategy will address trade-offs of infrastructure
with social perspective, private sector engage-
ment, environmentally sustainable projects, and
urban development, which are not separate is-
sues of the overall transport policy.
Jiayi Zou, Chairperson
xxv
Statement of the External
Advisory Panel

T
he members of the external advisory panel appreciate the effort of the
Independent Evaluation Group in preparing this report. Not surpris-
ingly, the report emphasizes that the transport sector is one of the most
important sectors serving national and international development, account-
ing for 5 percent to 6 percent of global gross domestic product (GDP). No sin-
gle United Nations entity deals solely with transport because of its supportive
role to all sectors, so the Bank has assumed a crucial responsibility toward its
member states and has largely met their expectations.

Over the past decade, well over 15 percent of
Bank lending has been allocated to 642 transport
projects or projects, with transport elements ex-
ceeding $30 billion in total lending. Bank com-
mitments for transport and transport-related
projects rank third in importance after the law, jus-
tice, and public administration sector and the so-
cial sector.
The report provides a wealth of concise global in-
formation, well-chosen examples, and useful case
studies, thereby providing firsthand background
for understanding the Bank’s operations and the
effort and views of its transport sector staff. The
findings are transparently provided, conclusions are
well documented, and the recommendations are
soundly formulated. The report, therefore, pro-
vides a solid foundation for Bank management to
develop and adopt new strategies and measures
aimed at achieving present and future global ob-
jectives. It is also of a great value to beneficiary and
donor countries and other stakeholders.
It is regrettable that this is the first evaluation of
the transport sector operations since the Bank
evaluation group was founded in 1973. It would
be appropriate to introduce an intermediate, less-
extensive 5-year follow-up evaluation that can,
together with the individual evaluations of proj-
ects, complement the decade-based studies en-
abling monitoring of Bank operational trends and
outcomes versus the Bank’s medium- and long-
term strategies.
The evaluation adopts a well-structured method-
ology of successive, interactive, and carefully de-
signed and implemented steps. These cover a
literature review, an analysis of the previously
mentioned 642 projects, solicitation of special
thematic studies on road maintenance and road

xxvii
A DECADE OF ACTION IN TRANSPORT
funds, a global overview of public-private part-
nerships (PPPs) in transport, a review of a special
transport policy programme in Africa, and infor-
mation extracted from existing impact studies in
Brazil and Morocco and a multilateral study in
Ghana. In addition, interviews were conducted
with Bank transport staff and with stakeholders
(government officials, transport service providers,
and interested parties), and detailed country case
studies were undertaken in Brazil, India, and
Tanzania. Therefore, an admirable geographical
balance between developing countries and con-
tinents has been achieved. Furthermore, the
deliberations and viewpoints of the external ad-
visory panel that arose during the progress of
the evaluation have been duly reflected in the
report.
The report concludes with recommendations de-
rived logically from the findings and the results of
the analysis. The panel supports these recom-
mendations. In addition, however, we would like
to emphasize important issues of particular con-
cern. Some of these are already dealt with in the
report; others are complementary.
• The failure of some projects to fulfill their
objectives and to achieve their institutional and
financial targets during the planned time period
is discouraging and should be avoided. Realis-
tic and attainable project objectives are neces-
sary, regardless of country or Bank aspirations.
• The report shows that monitoring and evalua-
tion are rated “least satisfactory” among the
subobjectives, in the analyses of the outcomes
of the objectives. The panel therefore believes
that it is of vital importance for the Bank and the
transport sector staff to adopt appropriate strate-
gies and to investigate better methods, indica-
tors, and tools (for example, log-frames and
target performance indicators) that are suit-
able for undertaking “results-based” monitoring
and evaluation of projects. These should be
defined during the project preparation phase.
• Bank technical assistance is often unsustainable
in recipient countries; therefore, the related
strategies need to be reassessed and improved.
xxviii
Country-driven ownership is important to at-
tain and is preferable to the imposition and en-
forcement of “pre-agreement conditions.”
• In some cases hired foreign consultants and
Bank staff are unaware of country conditions,
national obligations, and needs. Consequently,
Bank missions can recommend actions or proj-
ects that do not respond to local concerns,
priorities, or immediate requirements. If de-
cision makers of the recipient country are un-
aware of such shortcomings, poorly conceived
projects can get started and move forward,
wasting time and resources. Bank manage-
ment should carefully consider the selection of
mission team members. Local consultants and
academic transport specialists from the re-
cipient country should be professionally con-
tracted, not simply interviewed, as is the
current practice.
• Similarly, Bank training sometimes neglects
local context, needs, capabilities, and realities.
It should fully exploit local transport education
expertise in the recipient country wherever
available. If that is not possible, expertise from
neighboring countries or those experiencing
similar conditions should be utilized. Thus,
the provision of realistic initiation, planning, de-
sign, and implementation of training would
be ensured.
• The panel strongly supports the reported find-
ings on encouraging the Bank to go for riskier
multi-institutional and/or multisectoral projects
in developing countries, including road safety,
urban transport, and rural transport projects:
(a) More than 3,000 deaths result daily from
road accidents. Low- and middle-income
countries account for 85 percent of such
deaths and 90 percent of injuries (1 per-
cent to 2 percent of GDP), and Bank proj-
ects with road safety components show
mixed results to date, with outcomes often
unsustainable. Hence, we call for a more
thorough assessment of these projects,
analyzing shortcomings, investigating the
best methodology, and adopting a new

strategy, including the more cohesive multi-
disciplinary approach mentioned in the
report.
(b) Given that the number of cities with a
population of more than 1 million in de-
veloping countries is expected to increase
from 268 to 358 between 2000 and 2015,
we encourage more urban transport proj-
ects with a strong emphasis on the allevi-
ation of the causes of the transport
problem rather than just combating the
symptoms, as has been the case in many
previous projects. City governance under
conditions of urban sprawl might be ad-
dressed to improve institutions and re-
form regulations; loans can be used to
leverage these changes.
(c) Many citizens of developing countries are
rural poor, often with low or almost no ac-
cess to transport; transport of agricultural
products to markets is extremely difficult.
Poverty alleviation, a key objective of the
development agenda, can only be achieved
if rural poverty is reduced, transport being
an important catalyst. We therefore back
more emphasis on sustainable rural trans-
port projects.
• With the reported massive lending for intercity
highways infrastructure in the past decade (73
percent of Bank commitments to transport)
and in appreciation of the report’s clear rec-
ommendation to shift the focus of transport op-
erations toward environmental and safety
concerns, the panel supports more lending in
the next decade for projects that tackle global
warming and rising energy costs (for exam-
ple, land use/transport planning, restraining car
use and reducing distance traveled, encour-
aging modal shifts to environmentally friendly
modes, and so forth). This is in addition to in-
cluding environmental concern in all projects;
capabilities and obligations of developing coun-
tries should not be ignored.
• In several places the report refers to nonmo-
torized transport (NMT), pointing out its im-
S T AT E M E N T O F T H E E X T E R N A L A D V I S O R Y PA N E L
portance to the poor in urban and rural areas
of developing countries and its considerable
share of total daily movements. It also em-
phasizes the inferior conditions of NMT facil-
ities in many countries and the few Bank-related
projects. We appreciate this finding and urge
that the Bank fund more NMT projects, point-
ing out the problem of lack of sponsors to fi-
nance “outside the government budget”
because of the lack of or very low revenue-
generation nature of such projects. However,
pedestrians and cyclists are also taxpayers. The
Bank and its clients should identify new sup-
portive instruments and develop more sus-
tainable NMT strategies, capitalizing on its
environmentally friendly nature and its sound
economic and health effects on individuals
and families, compared with the motorized
modes. Support of concerned international
agencies (for example, Global Environment
Facility, the United Nations Environment Pro-
gramme, and so forth) should be sought.
• We clearly back the report’s strategic call for ad-
equate staffing of the transport sector; the
panel certainly supports including more mem-
bers with long experience as well as young
professionals. This ensures a smooth transi-
tion of experience, sustainable quality (inno-
vation) and quantity of projects, and knowledge
dissemination to clients’ staff during imple-
mentation of projects; lack of the latter is a
shortcoming of inadequate staffing indicated in
the transport sector staff interviews.
• It is disappointing for the panel and the world
transport community, particularly but not lim-
ited to researchers, to see few publications
and research done on Bank project outcomes,
data, and knowledge-base. Compared with the
huge extent of Bank lending and the number
of projects in the past decade, the share of
transport sector research papers, reports, and
publications is just 4.3 percent of the Bank
total. It is self-evident that the world will expect
much more in the coming decade.
• A country-specific approach to projects is im-
portant, because not all conditions prevail and
xxix
A DECADE OF ACTION IN TRANSPORT
not all rules are applicable in all countries. This
is vital for success and for reaching practical re-
sults. For example, metros should only be ap-
plicable for megacities, all-weather rural roads
only in countries with variable climates, and in-
stallation of certain types of information tech-
nology services linked to country technological
capabilities only to ensure sustainability (main-
tenance and/or upgrade). History; size; pre-
vailing circumstances and problems; past and
expected future development stages; economic,
social, and political obligations; the level and na-
ture of bureaucracy; current applied regula-
tions; and institutional performance and the
national culture of the public administration all
dictate this approach.
• We strongly support the Bank’s approach to en-
couraging private participation and removing
obstacles to achieve successful PPPs in the
transport sector in developing countries and
transition economies. This is particularly im-
portant for roads and road maintenance, ports,
and airports. It can also be applied in some el-
ements of railways (train operations, track, and
maintenance) and particularly encouraged in in-
land navigation, urban public transport, and
some traffic management projects. The lessons
of the success of road funds and previous global
experience with PPPs in transport are excel-
lently discussed and analyzed in the report and
very much appreciated by the panel. We urge
member countries and Bank staff to benefit
from the useful lessons presented, taking the
local context of each country into account with
emphases on the required prerequisites for
the success of PPPs.
• As reported, when road infrastructure is poorly
maintained, the public pays heavily through
higher vehicle-operating costs, accidents, loss
of travel time, and reduced accessibility to
jobs, among other results. However, decision
makers in developing countries do not neces-
sarily think in terms of long-term economic
benefits. They are rather often engaged in
xxx
emergency financing, and the governments
frequently lack liquidity for other urgent ser-
vices. The Bank certainly realizes this fact, and
we encourage new endeavors to promote par-
ticipation of the private sector in maintaining
roads and other transport assets. This simi-
larly applies to the operation and maintenance
of urban public transport.
• The fight against corruption is also very im-
portant. We admire the Bank’s continuous ef-
fort and invite even greater accomplishments
in this respect in the future.
• The panel supports sustaining previous at-
tempts to achieve a balanced allocation of
Bank lending by mode, country, and Region,
thereby serving the balanced development
cause.
• The panel acknowledges the Bank’s effort to
cooperate with other international funding
agencies, as reported, and calls for making
such connections closer and more pragmatic
and widening them, moreover, to include re-
gional agencies and transport professional
institutions.
• Finally, we add to the existing report recom-
mendations directed to Bank management a
further two-tier recommendation directed to
beneficiary countries—they should benefit
from the report contents and findings and also
upgrade the know-how and communication
skills of their executive and technical staff for
better utilization of the capabilities and knowl-
edge of the Bank’s missions. This will encour-
age negotiating sound and successful projects
with attainable objectives and sustainable out-
comes. Local universities’ transport academics
and the World Bank Institute have a key joint
role to play.
We acknowledge that we have been associated
with this valuable study and appreciate learning
much from our participation.

Members of the External Advisory Panel
Viorica Beldean, Honorary President of the
Board of METRUL Bucharest and President of
the Romanian Committee of CODATU (Cooper-
ation for Urban Mobility in the Developing World),
Romania
Ali S. Huzayyin, Professor of Transport and
Traffic Planning and Engineering, Faculty of
Engineering, Cairo University, and Director of
the Development Research & Technological
S T AT E M E N T O F T H E E X T E R N A L A D V I S O R Y PA N E L
Planning Centre, Cairo University, Egypt, and
First VP of CODATU
Pierre Laconte, Honorary Secretary General,
International Association of Public Transport,
Belgium, and President, International Society
of City and Regional Planners
Henning Lauridsen, Chief Research Engineer,
Institute of Transport Economics, Norway
xxxi
 Chapter 1: Evaluation Highlights

• Transport is an enabling sector for development and accounts for

nearly one-fifth of World Bank Group commitments.
• The products and markets of the transport industry are complex and
diverse.
• There is a strong link between transport improvements and poverty
reduction.
• Transport services are nonstorable and highly time and route specific.
 1
Study Rationale, Objectives,
and Organization

T
ransport is crucial for economic growth and trade, which are highly de-
pendent on the conveyance of both people and goods. Virtually no pro-
duction can take place unless inputs such as raw materials, labor, and
fuel can be moved from different locations; neither can manufactured prod-
ucts be delivered to consumers, nor a wide variety of services carried out.

Transport is estimated to make a contribution of no longer be so applicable The Bank Group

between 5 percent and 6 percent of gross do- in the future as the world
mestic product (GDP).1 It is therefore not sur- becomes more complex
committed nearly
prising that transport projects have accounted with sometimes compet- $32 billion for transport
for as much as $30 billion of the International ing forces. Those forces projects during
Bank for Reconstruction and Development’s/ come from rapidly expand-
1996–2006.
International Development Association’s (IBRD/ ing and urbanizing popula-
IDA)commitments during the past 10 years, with tions, trade globalization,
a further $1.9 billion committed by the Interna- new technologies, and more integrated approaches
tional Finance Corporation (IFC).2 to resolving intricate, multisector problems.

Role and Nature of Transport
Reductions in transport costs enable specialization
and economies of scale; they can also stimulate
trade and production and help to extend markets.
Similarly, improvements in urban transport have
been shown to enhance urban labor market effi-
ciency and enable changes in the scale and form
of urban agglomerations. All these linkages have
been confirmed by extensive empirical evidence
and show a positive correlation between transport
investment and economic outputs.3
But transport is entering a different paradigm.
The solutions that were successful in the past may
The products and markets of the transport in-
dustry are complex and diverse, and each trans-
port mode has distinctive characteristics. The
main modes are road transport, maritime and in-
land waterway transport, aviation, mass transit
systems, railways, and a va-
riety of informal means. Transport services and
Most modes provide for infrastructure are
both freight and passenger
conveyance. A basic dis-
complex and diverse.
tinction is drawn between
transport services rendered directly to the users
and transport infrastructure used by transport ser-
vice providers. Many transport services found in

3
A DECADE OF ACTION IN TRANSPORT
both industrial and developing countries are pri-
vately owned and operated, but privately owned
infrastructure is significantly less common. The
roles of and interrelationships between the pub-
lic and private sectors in transport and the sus-
tainability of transport systems and infrastructure
are pivotal to successful development.
Transport requirements also vary with the density
of population (urban and rural), the distribution
of wealth among a country’s inhabitants, and the
need to facilitate more efficient movements across
international boundaries. In the city and the rural
village alike, the basic problems are accessibility
and affordability. In both cases the poor are often
neglected because they cannot pay for services,
so governments with scarce resources have to
make difficult choices.
Transport provides a high The effects of transport
on poverty reduction are
level of indirect support
not well understood, but
to poverty reduction. growing evidence links
transport investment to
the improved well-being of the poor.4 Research in
rural Bangladesh, China, India, and Indonesia, for
example, has shown that the greatest returns for
agricultural productivity and poverty reduction
often result from investments in roads. In Mo-
rocco, socioeconomic surveys have demonstrated
that the provision of all-weather roads has im-
proved the quality of education, because improved
access makes it possible to recruit and retain qual-
ified teachers. Transport provides poor people
with the ability to participate better in development
opportunities. Improved rural roads, in particular,
enhance access to markets, jobs, schools, social ser-
vices, and health facilities. Currently some 1.2 bil-
lion of the world’s poor lack access to an
all-weather road.
Some facets of transport Improvements in accessi-
distinguish it from the bility for the urban poor
have similarly been shown
other infrastructure to have a marked effect
sectors. on their access to job op-
portunities and on the
quality of life of low-income city residents. It is pre-
dicted that in a few years half of the developing
4
world’s population will live in cities that as yet do
not have transport systems that can cope with
the expected influx of people.
Many transport sector issues are shared with the
other economic infrastructure sectors, such as
energy and water. But transport, and especially
transport infrastructure, has a number of distin-
guishing features that bear directly on the relative
roles of government and the private sector in
their development and management. Notable dif-
ferences include the following:
• At both national and local levels, transport
infrastructure interrelates closely with land
use and has a large impact on the physical
structuring of the overall economy and its
inclusiveness. These are areas of preeminent
government responsibility that usually require
proactive planning, in addition to appropriate
pricing and taxation policies.
• Transport activity, especially in roads, has sig-
nificant negative external effects (particularly
congestion, air and noise pollution, and acci-
dents), which have proved much more difficult
to reflect directly in pricing structures than
externalities generated in other sectors. This
means that government interventions are often
needed to improve resource allocation.
• Transport infrastructures tend to have partic-
ularly long lives if efficiently maintained, so
the economic priority of investing in them de-
pends to a great extent on uncertain predic-
tions of demand in the far future, and capital
charges often account for a higher share of
the overall costs of service delivery than for the
other infrastructure sectors. This means that
government absorption of some risks may be
necessary to realize investments that are con-
ducive to a desirable physical structuring of the
country’s territory and economy.
• Transport services are also nonstorable and
are highly time and route specific. For these rea-
sons, the difficulties of achieving economically
efficient pricing structures require that costs
sometimes be recovered from within the sec-
tor only by use of cross-subsidies and that
some services may need to be subsidized from
outside the sector. The great diversity of trans-

port services, and the need for them nonethe-
less to interlink in manners specific to time and
place, also means that special attention often
has to be given to coordination among enter-
prises and agencies operating in the different
modes.
Evaluation Rationale, Objectives,
and Organization
This evaluation responds to interest from the
Bank’s Board of Executive Directors regarding
both the impact of the private sector on infra-
structure and the role of infrastructure in support
of the Millennium Development Goals (MDGs).
It complements infrastructure reviews already
completed by the Independent Evaluation Group
(IEG) in the water, electric power, urban, and
telecommunication sectors.
The pillars of the current Bank transport strategy
define the four main areas that are the primary
focus for this evaluation:
• The extent to which client countries have de-
veloped competitive markets in transport and
rethought the respective roles of the private
and public sectors in transport supply.
• The extent to which transport projects and
strategies in member countries are sustain-
able. This is meant not just in terms of the
preservation of physical assets and the ability
to address environmental matters, but the
whole supporting edifice of an appropriate
regulatory and policy framework, sound gov-
ernance, and an adequate institutional capac-
ity, including an appropriate organizational
structure and sufficiently trained personnel.
• The degree to which transport assistance has
been able to contribute to poverty reduction
in both rural and urban contexts.
• Fourth, based on lessons learned and taking
into account the availability and adequacy of
resources in the sector, an assessment of
the readiness of the Bank transport network to
respond to the emerging global challenges it
has identified.
The review has eight chapters. Chapter 2 dis-
cusses global trends, Bank strategy, and sector
S T U D Y R AT I O N A L E , O B J E C T I V E S , A N D O R G A N I Z AT I O N
outcomes. Chapter 3 ana- Transport services are
lyzes the transport portfolio,
not storable and are
including performance by
mode and by Region. It con- time and route specific.
cludes with a discussion of
Regional donor cooperation and an assessment
of nonlending assistance. Chapter 4 is devoted to
the Bank’s role in promoting private sector par-
ticipation in transport, and chapter 5 focuses on
sustainability, institutional development, and en-
vironmental protection. Chapter 6 reviews the
contribution of transport to poverty reduction,
and chapter 7 examines process, resource, and
performance issues pertaining to the transport
network. The final chapter presents the main
findings, lessons, and challenges this sector is
likely to face in the future, as well as the study’s
recommendations.
Evaluation Method
This study is the first major and comprehensive
IEG evaluation of the transport sector; in the past
only subsectors such as urban transport, railways,
and ports have been reviewed. The period covered
by the review is July 1995 to
June 2006. During this time This study is the first
there were 642 projects with
comprehensive IEG
transport components in the
portfolio. Of these, 335 have review of the transport
closed and 2845 have been sector.
evaluated by IEG. This ex-
tensive customized database covering all transport
modes provided the foundation for an analysis of
how the projects performed, their outcomes, and
what lessons have been learned.
A number of instruments were used to conduct
this review (further details are in appendix A):
• Literature review: Covering published docu-
ments on transport issues relating to devel-
oping countries, complemented by a review of
Bank nonlending transport activities
• Portfolio review: 642 projects examined
• Analysis of existing evaluations: 57 Country
Assistance Evaluations (CAEs); 254 reviews of
Implementation Completion Reports (ICRs);
74 Project Performance Assessment Reports
5
A DECADE OF ACTION IN TRANSPORT
(PPARs) covering 41 countries, of which 20
were specifically selected during the study de-
sign for inclusion to ensure a balanced geo-
graphic and modal coverage
• Special thematic studies: Road maintenance
and road funds, a global overview of public-
private sector balance in transport, and a review
of a special transport program in Africa. Infor-
mation was also extracted from existing impact
studies in Brazil and Morocco and a multilat-
eral study in Ghana.
6
• Stakeholder interviews and Bank staff inter-
views: One-third of the Bank’s transport net-
work staff—representative of both headquarters
and country offices—was interviewed. Stake-
holders interviewed included government of-
ficials, providers of transport services, and
interested parties, such as consultants, user
groups, and academics.
• Country case studies: In-depth analysis of
transport activities and stakeholder opinions
in Brazil, India, and Tanzania.
 Chapter 2: Evaluation Highlights

• Without efficient transport, the productive sectors cannot fulfill their

potential, so many of the MDGs will not be achieved.
• Globalization has intensified the need for efficient transport.
• Private sector engagement in transport increased in the early 1990s,
but the public sector remained dominant.
• Increased attention by the Bank to the social sectors drew lending
away from transport for a while.
• Since 2002 there has been a strong swing back to transport lending
as part of the Bank’s renewed emphasis on infrastructure.
 2
Global Trends, Bank Strategy,
and Sector Outcomes

G
lobalization, and especially international trade liberalization, has
greatly stimulated investment in the transport sector. East Asian
economies in particular have been growing at over 7 percent annu-
ally for the past 15 years. Accompanying this growth has been a commensu-
rate increase in the demand for transport infrastructure and services.

Global Transport: Trends and Issues opment on international Efficient transport is

Global competition has intensified the need for
efficiency in transport and logistics systems in
the delivery chain, from the point of manufacture
to delivery to the customer. The challenge for
transport providers is to meet future capacity
needs and further develop technology to achieve
greater efficiency and lower costs. As oil prices
have risen, transport has increasingly become
the biggest cost factor in the final amount the con-
sumers pay.
International Coordination
Because transport is supportive rather than directly
productive, it is inevitably integrated into the
strategic frameworks of other sectors. This is why,
unlike in many other sectors, there is no single
United Nations (UN) entity responsible for pro-
moting and coordinating transport issues, al-
though there are some valuable international
initiatives that have established cross-cutting global
strategies on specific transport-related subjects.
Good pioneering efforts include studies by the
United Nations Conference on Trade and Devel-
transport problems fac-
vital for trade
ing landlocked countries,
the report on prevention globalization.
of road traffic injuries by
the World Health Organization (WHO), the Global
Facilitation Partnership for Transportation and
Trade, and the International Civil Aviation Orga-
nization (ICAO) on air safety and security.1
Transport features indirectly in many other strate-
gic areas, including air pollution and HIV/AIDS pre-
vention. Predictably, it is
an important component Transport is an
in both rural and urban
enabling element
for
development programs.
achieving the MDGs.
Poverty Reduction
The UN Millennium Declaration, the cornerstone
of the world’s current development agenda, does
not specifically feature transport in its 2015
MDGs—goals that include freedom from hunger,
universal primary education, gender equality, re-
duced child mortality, improved maternal health,

9
A DECADE OF ACTION IN TRANSPORT
control of disease, and environmental sustain-
ability. Transport does, however, provide acces-
sibility both for rural villagers and urban slum
dwellers and is a vital enabling element of achiev-
ing many of the MDGs.
The absence of adequate transport can ensure that
the poorest people remain in poverty. This is a crit-
ical issue when half the world’s population lives
on less than two dollars a day and a fifth survives
on a dollar a day or less.
Transport Efficiency
According to studies undertaken by the UN Con-
ference on Trade and Development (USAID 2001),
11.5 percent of the total value of imports to Africa
is related to transport costs. The equivalent per-
centage for Asia is 7.2 percent and North Amer-
ica, 6.7 percent. On the export side, for many
countries in Sub-Saharan Africa, at least 20 percent
of the export costs are directly attributable to
transport. For landlocked countries such as Malawi,
the figure can be as high as 55 percent.
This very seriously weakens the terms of trade for
such countries. Transport inefficiencies can also
exacerbate the impact of distance. For instance,
it can cost three times more and take five times
longer to move a container
Privately run transport 500 kilometers (km) inland
services are widespread in China than it does in the
and usually successful. United States. Economies of
scale are becoming increas-
ingly important and have resulted in the estab-
lishment of huge transport hubs, where high
productivity can reduce costs dramatically.
Private Sector Involvement
Privately run transport services are widespread and
usually successful. Optimism was high in the early
1990s that the private sector could also assume
a much larger part of the responsibility for trans-
port infrastructure. But market expectations, es-
pecially in developing countries, turned out to be
far too ambitious, and after a dramatic decline in
the late 1990s recovery only became evident in
2005. Nevertheless, despite a few highly publicized
failures, successful private concessions have been
established in all modes of transport.
10
In developing countries transport concessions
are most common in middle-income countries,
such as Argentina, Brazil, China, Mexico, South
Africa, and Turkey. In these countries the volumes
of traffic, particularly for toll roads, are more at-
tractive and there is sufficient public sector capacity
to engage with potential private sector conces-
sionaires. Despite this progress, for the foresee-
able future, the public sector will undoubtedly
remain the largest owner and operator of basic
transport infrastructure, partly because the trans-
port sector—especially roads—manifests public
good characteristics and partly because of grow-
ing concerns about safety and security issues.
Infrastructure Sustainability
A lack of capacity to preserve infrastructure assets
after construction is a problem confined mostly to
developing countries. Inadequate maintenance
budgets in the face of widespread poverty, as well
as lack of skills and political instability, have all con-
tributed to concerns about the adequacy of asset
preservation, especially in the more fragile coun-
tries. Positive results have been achieved through
introducing a degree of management autonomy,
better assurance of funding, greater public partici-
pation and more involvement by the private sector.
Transport Sector Growth
In the transport sector, the motor industry has
reached maturity in the markets of North Amer-
ica, Europe, and Japan. Globally, however, it is
poised for huge expansion with the motorization
of China and India. Within a few years China will
replace Japan as the second-largest national mar-
ket after the United States, and over the next
20 years more cars may be built than in the entire
110-year history of the industry (Economist 2005).
Similar expansion is expected in the aviation and
maritime industries; only in railways is growth
likely to be slower. Especially in the developing
world, urban growth is surging, and the number
of cities with more than 1 million inhabitants is on
track to increase from 268 in 2000 to 358 by 2015
(UN Habitat 2001). Although some recent ad-
vances in technology, such as telecommuting;
electronic pricing; and improved vehicle, fuel,
and engine efficiency may to some extent impinge
 G L O B A L T R E N D S , B A N K S T R AT E G Y, A N D S E C T O R O U T C O M E S
on likely future scenarios for the industrial coun-
tries, for most of the world’s inhabitants, such de-
velopments may have only peripheral relevance in
the short to medium term.
Environmental Issues
We now live in a global community. Not only
poverty, but air pollution, transmission of dis-
eases (including HIV/AIDS), and safety and security
all have important transport aspects. Reducing the
negative impacts of transport activities needs an
integrated international approach involving mul-
tiple sectors. If the transport challenges for the
next decade are to be met, then environmental
issues and sustainable development must be more
prominent in the design of future transport proj-
ects. For cities in developing countries, some
experts (Gwilliam 2005) are calling for more imag-
inatively designed public transport projects that
will be more creative in the structuring of pas-
senger fares, better complement land use policies
that assist the poor, and combat traffic congestion
through the supply of cost-effective solutions
such as bus rapid transit systems, parking strate-
gies, and road pricing schemes.
Foundations and Relevance of the Bank’s
Current Transport Strategy
The existing Bank transport strategy has evolved
from the accumulation of considerable experience
over a long period.2 The only formal sector strat-
egy paper produced by the Bank on transport,
however, is Sustainable Transport: Sector Review
and Lessons of Experience (World Bank 1996, and
as updated in Sector Strategy Implementation Up-
dates [SSIUs]). Three widely distributed reports,
however, have played a role in shaping the current
Bank strategy: the World Development Report: In-
frastructure for Development (World Bank 1994b),
Sustainable Transport: Priorities for Policy Re-
form (World Bank 1996), and Cities on the Move
(World Bank 2002a). A fourth report on safe, clean,
and affordable transport for development is in the
consultation stage. It is intended that this document
provide a formal basis for an update of the Bank’s
1996 strategy paper for the period 2007–15.
The essence of the latest thinking is that virtually
all the arguments that formed the basis of previ-
ous documents remain The motor industry is
valid, but today several is-
poised for strong growth,
sues need much greater
emphasis—a view this eval- which heightens environ-
uation confirms. Finally, an mental concerns.
infrastructure action plan
from 2003 is also important and relevant because
it launched a scale-up of Bank infrastructure in-
vestment, including transport. Each of these doc-
uments is now briefly considered.
World Development Report 1994
In the early 1990s there was growing support for
the notion of greater participation by the private
sector in the provision of infrastructure. This
stance was encouraged by arguments questioning
infrastructure’s inherent natural monopoly struc-
tures. For example, the theory of contestable
markets was influential in airline deregulation.
Gomez-Ibanez and Meyer (1993) reported that pri-
vatization in transport on balance seemed to have
been more beneficial than not but was not a
panacea. The privatization solution, among other
things, depended on the competitiveness of the
markets served and the extent to which efficiency
gains could be realized.
The Bank’s 1994 World De- The 1994 WDR propelled
velopment Report (WDR)
the Bank toward greater
was the seminal document
propelling the Bank toward use of the private sector
the greater use of the in infrastructure.
private sector in infra-
structure. It concluded that many devel-
oping countries would benefit through
economic growth and poverty reduction if
incentives to providers were clarified and
strengthened. This could be achieved by giving
management more autonomy and focusing ac-
countability on service to customers; by structur-
ing the sectors and relevant regulation in a manner
to promote effective competition; and by giving
users and other stakeholders more voice and re-
sponsibility in planning and
regulatory arrangements. Private sector
involvement varies in
Increased reliance would
be placed on the private intensity from one
sector for the direct provi- country to another.
11
A DECADE OF ACTION IN TRANSPORT
sion of infrastructure and services (including trans-
port). Services would benefit from the positive ex-
periences in a number of countries in the industrial
and developing world alike. Governments would
concentrate on creating and maintaining legal
and regulatory frameworks to attract private
providers. At the same time, they would safeguard
the interests of the poor, improve environmental
conditions, and coordinate cross-sector interac-
tions. In urging consideration of increased re-
liance on private sector providers, the WDR also
recognized that private involvement would in-
evitably grow at substantially different rates in dif-
ferent countries. Those rates depend on private
capacities, the ability of government to provide an
appropriate regulatory framework, the perfor-
mance of public sector providers, and political
consensus in favor of private provision.
Sustainable Transport
The ideas in the WDR were expanded on in the con-
text of the Bank’s 1996 Sustainable Transport
paper, which found that the dominance of the pub-
lic sector in the operation of transport services had
in some cases resulted in adverse effects. Those in-
cluded high costs, lack of flexibility in service pro-
vision, and assets not being properly maintained.
Sustainable Transport To redress these shortcom-
encouraged ings the report advocated
the Bank to encourage
substantial changes in substantial changes in
government’s role. the role of government
in transport, reducing its function as a sup-
plier but increasing its function as a regu-
lator. It recognized that governments need to
create a proper institutional framework for com-
petition, set economically efficient charges for the
use of publicly owned transport infrastructure,
and increase community participation in decision
making. The theme of “sustainability” was com-
prehensive and intended to include economic, fi-
nancial, environmental, and social sustainability.
Cities on the Move Cities on the Move
focused attention on A few years later, a Bank
urban transport strategy re-
transport modes in view entitled Cities on the
urban areas. Move (2002a) concentrated
12
on the social exclusion aspects associated with
urban inaccessibility. Its objectives were to de-
velop a better understanding of urban
transport problems and to articulate a
strategic framework that could be applied
in developing countries. The report recognized
that urban growth increases transport costs:
“Economies of agglomeration generate the growth
of cities. As cities grow and become richer, vehi-
cle ownership and use grow more rapidly than the
available road space, resulting in increased con-
gestion and traffic-generated air pollution.”
The report also observed that the number of
megacities—cities with more than 10 million in-
habitants—is expected to double within a gen-
eration. It recognized that increased use of private
vehicles in cities is contributing to falling demand
for public transport and a subsequent decline in
service levels. Sprawling conurbations have made
the journey to work excessively long and costly
for many of the poorest people, while pedestri-
ans and nonmotorized transport continue to be
inadequately served. The paper concluded that
transport provision can play an important role in
social safety nets.
Changes in Poverty-Reduction Strategies
During the mid-1990s, the prevailing view inside
the Bank was that the rapid growth in the volume
of private infrastructure investments would con-
tinue unabated. At that time there was also in-
creasing concern about the Bank’s public image,
following potentially damaging opposition by sec-
tions of civil society to a handful of large but high-
profile infrastructure schemes. This undoubtedly
accelerated a strategic shift in the Bank’s focus,
from infrastructure to the public administration
and the social sectors (figure 2.1).3
The shift also reflected a growing view that there
should be a more direct focus on poverty reduc-
tion, given the neglect of the social areas dis-
cussed in the context of the IDA Replenishment
Agreements and of the Highly Indebted Poor
Countries Initiative. Spending on infrastructure
was further dampened by the Asian financial cri-
sis, which had a global knock-on effect for many
developing countries. From 1998 to 2002 the
 G L O B A L T R E N D S , B A N K S T R AT E G Y, A N D S E C T O R O U T C O M E S
Figure 2.1: Trends in IBRD/IDA Lending by Major Sector Groups, 1991–2004
12
3-year moving average
10
US$ billion:
2
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Law, justice, public administration
Infrastructure (nontransport)
Social sectors
Transport
Source: World Bank data.
Bank cut back its infrastructure lending from $9
billion to about $5 billion per year; at 30 percent
of total Bank lending this was an all-time low.
Transport lending by IBRD and IDA peaked in
fiscal 1997 at an annual average of almost $4.0 bil-
lion before falling off sharply to $1.7 billion by fis-
cal 2000.
By 2002 it had become clear that the reduction of
infrastructure lending was a cause for concern.
There was general concurrence that for devel-
oping countries total infrastructure investment
should be in the region of 5.5 percent of GDP, but
it was reported that only 3.5 percent was actually
being realized. Representatives of some large de-
veloping countries expressed dismay that invest-
ments in intercity highways in particular were
lagging behind. Private sector investment in in-
frastructure had peaked globally at about $110 bil-
lion in the late 1990s before declining to around
$58 billion in 2002. At the same time, there was
recognition of the links among infrastructure ser-
vice provision, increased economic growth, and
the reduction of poverty as expressed in a num-
ber of contexts, including the MDGs.
The World Bank Group acknowledged that re-
versing this trend required scaling-up infrastruc-
Year
Industry and trade
Information and communication technology
Agriculture
ture spending. It launched A combination of
an infrastructure action
factors, including greater
plan to reassess and ac-
celerate its infrastructure attention to poverty
lending program. This plan reduction, reduced
included anticipating client
attention on transport
demand for infrastructure,
rebuilding the knowledge and infrastructure in the
base, and creating new late 1990s.
lines of business and in-
struments to meet emerging client needs. Figure
2.1 shows how transport commitments by IBRD/
IDA fluctuated immediately before and during
the study period and illustrates the trends de-
scribed in this section.
By the end of fiscal 2004 transport commitments
at $3.7 billion had returned almost to the nomi-
nal level experienced in fiscal 1997. Roads and
highways continued to dominate the new portfolio.
Update of Sector Priorities
The Bank’s Transport Sector Board is currently
updating sector priorities for the period 2007–15
in a draft document. This draft recognizes that
the world’s thinking on economic development
has moved on and that initiatives such as the
13
A DECADE OF ACTION IN TRANSPORT
Recognizing MDGs are now central to the
development debate. While the
infrastructure was
fundamental pillars of the
linked to growth and Bank transport strategy
poverty reduction, the remain valid, the draft calls
Bank shifted its for additional emphasis
on issues related to pov-
attention back to the erty reduction, interna-
transport sector in tional trade, the environ-
2002. ment (especially in cities),
and safety.
In four of the MDG goals, health and environ-
mental sustainability are crucial issues. In these
areas transport can contribute strongly by reducing
road traffic accidents, controlling vehicle emis-
sions, and taking measures to restrict the trans-
mission of disease where transport has a role.
Making transport more affordable is a major chal-
lenge; not only can high transport costs discour-
age trade and economic growth, but they can
also reinforce the economic and social exclusion
of the poorest people, both in the rural and urban
contexts. Although these policy issues are not
new, until recently they have not been accorded
top priority or applied in a sufficiently meaning-
ful number of projects.
This review thus looks for evidence as to how
these issues have been addressed during the past
10 years and suggests how the
Increased Bank can learn from its experi-
involvement ence in changing its strategic
of the private sector emphasis. Recently the Bank
Environmentally and Socially
in transport improves Sustainable Development Net-
accountability and work (ESSD) was combined
efficiency, but the with the Infrastructure Net-
work. The purpose of consoli-
extent of investment dating these two networks is to
has been mainstream environmental is-
disappointing. sues, improve synergies, better
integrate core operations, and
strengthen the focus on sustainability. Some of the
lessons of experience described in this evaluation
may assist the deliberations emanating from this
new alignment.
14
Sector Outcomes
Encouraging Competitive Markets/Assisting in
Balancing the Roles of the Public and Private
Sectors
At the broadest level there is little doubt that the
WDR was correct in noting that increased in-
volvement of the private sector in transport would
improve accountability and efficiency. That claim
has proved to be substantially correct in most
Bank projects evaluated. Despite a few failures, ac-
cording to the extensive background paper pre-
pared on this matter, the vast majority of project
outcomes worldwide have also been positive. Ef-
ficiency and service indicators have typically shown
sustained improvement following the introduction
of private participation, while many projects have
helped establish the regulatory frameworks nec-
essary to safeguard the public from the abuse of
monopoly power and to ensure compliance with
safety and other issues of public concern.
However, the extent of investment by the private
sector in transport infrastructure has been dis-
appointing. In the early 1990s there were expec-
tations that the private sector would play a
substantial role in the provision of such infra-
structure. Indeed, investment in developing coun-
tries did show early growth, but it peaked in 1997
at $18.4 billion (figure 2.2).
In 2002 it then collapsed to $2.9 billion as better
opportunities for scarce funds were perceived
during a period of financial instability. Financial re-
turns on transport projects were seen as being
very long term and therefore risky. Confidence has
been restored just recently, with $16.2 billion
committed in 2005. The Bank erred in reducing
commitments to transport infrastructure so se-
verely in the late 1990s, despite the warnings in
the Sustainable Transport paper that filling the
gap through private sector funding was unlikely
to succeed.
Increased private sector involvement in transport
infrastructure concessions has had positive effects
on both technical and allocative efficiency. Here
the Bank has played a modest role in supporting
 G L O B A L T R E N D S , B A N K S T R AT E G Y, A N D S E C T O R O U T C O M E S
Figure 2.2: Private Sector Investment in Transport Projects in Developing Countries,
1990–2005
25,000
20,000
US$ millions
15,000
10,000
5,000
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Source: World Bank data.
toll-road concessions; it has played a more sub-
stantial role in railway restructuring in Latin Amer-
ica (especially Brazil) and in support of railways
transitioning from command to market economies
in Eastern Europe and Central Asia. The Bank
Group has also given substantial support to pri-
vatization of ports and waterways projects and
more recently to aviation projects.
Helping Clients Achieve Sustainable
Management of the Sector
The Bank’s main contribution to the road sub-
sector has been through the encouragement of
private sector involvement in road and mainte-
nance management. It has had some success in
improving road department accountability, often
by establishing road agencies and road funds and
contracting out to the private sector—not only
construction and rehabilitation, but also routine
maintenance, design, and general supervision.
Transparently competitive tendering of works
against performance-based specifications has
been a significant step forward.
For the other transport subsectors, sustainability
has been less of an issue, because after the in-
troduction of private sector business principles
and appropriate financial models, far fewer prob-
lems have ensued. This situation assumes that gov-
ernments meet their obligations for subsidizing
services that are not fi- The Bank has had
nancially viable but that
are deemed to be in the
successes encouraging
public interest and that greater private sector
they do not interfere in involvement in roads.
labor issues.
For urban transport there has been growing recog-
nition of the need for integrated efforts between
public sector officials responsible for road infra-
structure, traffic flow, and parking regulations
and the increasing number of private bus com-
panies, with interdependent performance targets
jointly set. A key issue is whether the Bank has sup-
ported enough projects of this nature.
Supporting Transport Projects Contributing
to Poverty Reduction
Many transport projects indirectly support
poverty reduction, but the linkages are frequently
difficult to measure. The most important con-
tribution of increased private participation in
reducing poverty is through its effect on the ef-
ficiency and costs of transport and consequently
on the competitiveness of other sectors and on
general economic growth.
Such effects often have a
Many transport projects
stronger distributive dimen-
sion in the transport sector indirectly support
than in other infrastructure poverty reduction.
15
A DECADE OF ACTION IN TRANSPORT
sectors because of transport’s special role in the
geographical spread of development. In the lit-
erature review, however, no substantial evidence
of serious negative impacts on poor people re-
sulting from transport privatization actions has
emerged.
The distributional impact of transport projects is
relatively underresearched, but there is evidence
from, for example, the rural road impact study in
Morocco (appendix B) that village road improve-
ments can significantly affect school enrollment
and attendance. Similar evidence shows that clin-
ics, nutrition programs, and
Under Bank leadership even credit extension depend
an indicator of rural on transport in one way or
another, aside from the ob-
accessibility has been vious direct benefits from im-
established. proved access to produce
markets and from new em-
ployment opportunities in road construction and
maintenance. Because transport provides acces-
sibility for both rural villagers and urban slum
dwellers, it is recognized as vital to achieving many
of the MDGs.
Considerable international attention and funding
have been made available toward the achieve-
ment of these goals, but one problem has been the
unavailability of suitable indicators to measure
progress. Under Bank leadership the first indica-
tor has now been established for rural accessibil-
ity. “Sustainable access to rural transport” measures
the number of people who live within a 2-km
walk of an all-season road. When other compan-
ion indicators are developed in the near future, it
will be possible to better quantify progress in
poverty reduction internationally because of im-
proved transport infrastructure and services. More
impact studies on the effects of improved acces-
sibility would, however, be beneficial.
A further area that could be improved is the
achievement of substantive and lasting capacity
building. During the past decade, results have
been patchy in this area because the traditional
sector approach often appears to be inadequate
for tackling a problem that can cut across several
16
sectors. Recent moves to introduce program-
matic, multidonor approaches may yield better
results.
Responding to Global Transport Sector
Challenges
These have been identified as safety, reductions
in vehicle emissions, and improvements in trans-
port affordability. Every day around the world,
more than 3,000 people die from road traffic in-
juries, with low- and middle-income countries
accounting for nearly 85 percent of the deaths and
90 percent of the injuries. Although the number
of deaths in industrial countries is declining, the
figure for developing countries is increasing rap-
idly; by 2020 it is predicted that road traffic injuries
will be the third leading contributor to the global
health burden.
WHO and the World Bank have jointly produced
a World Report on Road Traffic Injury Prevention
(WHO 2004). It suggests that such injuries are a
growing public health issue, disproportionately
affecting vulnerable groups of road users in de-
veloping countries. Road traffic injuries cost low-
income and middle-income countries nearly 2
percent of their GDP—often more than the total
development aid received by these countries.
Sector-wide efforts to reduce the incidence of
such injuries have for the most part been frag-
mentary and relatively ineffective. Completed
Bank projects with road safety components have
had mixed results, and the outcomes have not al-
ways been sustainable.
The direction now is toward a more cohesive ap-
proach whereby the problem would be tackled on
a multidisciplinary and cross-sectoral basis. A sim-
ilar course of action is being followed by the avi-
ation sector with the ICAO, based on concerns
about deteriorating safety and security standards
in some developing countries.
Road transport alone accounts for nearly a quar-
ter of the man-made gases said to accelerate climate
change. Public transport offers clear advantages for
reducing congestion and pollution, as well as for
increasing safety. Progress, however, has often
 G L O B A L T R E N D S , B A N K S T R AT E G Y, A N D S E C T O R O U T C O M E S
been disappointing. Private vehicle users rarely
pay the true costs they impose on society, and
this encourages urban sprawl. At the same time,
decentralized cities with lower population densi-
ties and long trip distances increase the cost of
providing public transport. The urban poor, who
usually reside on city peripheries, are often mar-
ginalized by the lack of accessibility. The Bank has
led some initiatives and prepared both general
and specific guidelines in this area, but much more
remains to be done.
Policies to ameliorate the problem of poor air
quality are gradually being implemented in the in-
dustrial world, and some pioneering work has
been done in developing countries, especially
Brazil and Mexico, and in some Asian cities. The
Bank has been at the forefront of this activity
and produced a report entitled Reducing Air Pol-
lution from Urban Transport (World Bank 2004a)
aimed at national and local policy makers in-
volved in air quality management. Implement-
ing these ideas is still work in progress, especially
in poorer countries where politicians are more
concerned with pressing basic needs.
Progress on affordability Road transport accounts
has been more substantive.
for nearly a quarter of
The delivery of transport
services and infrastructure the man-made gases
has generally become more contributing to climate
efficient with greater in-
change.
volvement of the private
sector, but this has not al-
ways resulted in savings passed on to the poor.
Much more attention needs to be given to ap-
propriate pro-poor subsidization policies and the
relationship between land use and transport costs.
Globalization and rising fuel prices have rein-
forced the pressures of market forces on transport
providers to ensure they are as efficient as pos-
sible. However, as demographic and factor costs
continue to rise, further innovation and experi-
mentation will become necessary. The Bank is a
player but could become a real change agent in
this arena.
17
 Chapter 3: Evaluation Highlights

• Transport lending commitments have fluctuated considerably dur-

ing the review period. Roads dominate the portfolio.
• India and China account for 42 percent of all transport commitments.
• Average project size has increased over the past 10 years.
• Project outcome ratings have steadily improved over the past decade.
• Transport sector-wide approaches and program-based approaches
will need to be evaluated more systematically when initial projects
have been completed.
• Greater donor cooperation looks promising despite coordination
issues.
• Nonlending assistance and knowledge dissemination have been
given insufficient attention.
 3
Bank Support to the
Transport Sector

T
otal IBRD/IDA transport commitments fluctuated considerably over the
past decade (figure 3.1). At their highest volume, just under $4.0 bil-
lion in fiscal 1997, they constituted 21 percent of all Bank lending. At
their lowest point, $1.7 billion in fiscal 2000, they were just 12 percent. But
the average for annual commitments for transport, at 15 percent, was one of
the highest shares of sector lending during the decade.

Trends in Bank Lending to Transport
These fluctuations reflect the relative weight at-
tached to infrastructure in the Country Assistance
Strategies (CASs), mirroring the strategic think-
ing at the time. The low point in 2000 came from
a greater emphasis on the social and public ad-
ministration sectors, while the recent peak in
2004 was a result of the increased priority ac-
corded to infrastructure investment in general. In
fiscal 2005 the upward trend dipped, because of
constraints in IDA lending in Africa and post-
poned activities in East Asia. However, the upward
trend has resumed; based on the value of projects
in the pipeline, it is expected to stabilize at around
$3.5 billion per annum.
ects were completed annu- The majority of projects
ally. Meanwhile, the aver-
age transport project size
were prepared under the
has shown an upward purview of the Transport
trend, from $100 million in Sector Board.
1995 to $150 million in 2005
(figure 3.2). The Bank’s
Public-Private Infrastructure (PPI) database for
developing countries shows that the concentra-
tion of transport lending to the larger borrowers—
such as Argentina, Brazil, China, India, and, more
recently, Indonesia and Mexico—has contributed
to the increasing average project size because
these borrowers have the capacity to manage
very large investment programs.

During the past decade an average of 84 percent
of commitments for transport were prepared
under the Transport Sector Board, with the re-
maining 16 percent prepared as part of projects
in other sectors such as urban or agriculture. In
these latter cases, transport was typically a minor
component. On average, some 26 transport proj-
Most of the countries receiving the largest share
of transport lending are in the middle-income
group; the seven top coun-
tries in the period 2001–05
Lending has increasingly
also featured in the pre-
ceding 5-year period, with concentrated on a few
some slight differences in middle-income borrowers.

19
A DECADE OF ACTION IN TRANSPORT

Figure 3.1: Trends in IBRD/IDA Commitments for Transport, Fiscal 1995–2005

Trend in IBRD/IDA commitments for transport

4.0 20

Percentage of all IBRD/IDA

18
3.5 ▲ 17
▲
15
3.0 ▲ 15

commitments
US$ billion

12 12
2.5 ▲
11
▲
10 11
9 9 10 ▲ ▲
2.0 ▲ ▲ ▲ 10
▲
1.5
1.0 3 3 5
3 3
2 1 2 2 2 2
0.5 1
0.0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Financial year
Commitments for transport in transport sector.
Commitments for transport in other sectors.
▲ Commitments for transport in transport sector as percentage of all IBRD/IDA lending.
Commitments for transport in other sectors as percentage of all IBRD/IDA lending.

Source: World Bank data.

Figure 3.2: Trends in Average Project Size, Transport Sector Projects versus
All Other Projects, Fiscal 1995–2005

180
160
US$ million

140
120
100
80
60
40
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Fiscal year
Transport Sector Board projects All other projects

Source: World Bank data.

ranking order (table 3.1). India recently displaced
China as the largest borrower, while Brazil is
ranked third, Indonesia fourth, and Argentina
fifth. These five countries currently account for 54
percent of all transport lending.
The concentration of transport commitments in
China and India has increased from 31 percent to
40 percent of all transport lending over the past
decade. An analysis of all nontransport Bank com-
mitments for the same period (appendix A, table

20
 BANK SUPPORT TO THE TRANSPORT SECTOR

Table 3.1: IBRD/IDA Commitments for Transport ($ billions): Share of Top 5 and Top
10 Countries, Fiscal 1995–2000 and Fiscal 2001–06

Commitments Commitments
for Share for Share
fiscal of total fiscal of total
Country 1995–2000 (%) Country 2001–06 (%)
China 4.2 24 India 4.2 25
Brazil 1.7 10 China 2.3 14
India 1.3 7 Brazil 1.1 7
Russian Federation 1.2 7 Indonesia 0.6 5
Argentina 1.1 6 Argentina 0.5 3
Indonesia 0.6 3 Vietnam 0.5 3
Mexico 0.6 3 Mexico 0.4 3
Bangladesh 0.5 3 Colombia 0.4 2
Vietnam 0.4 2 Congo, Democratic Republic of 0.3 2
Poland 0.4 2 Egypt, Arab Republic of 0.3 2
Total (all other countries) 5.9 33 Total (all other countries) 6.2 34
Total 17.9 100 Total 16.8 100
Share of top 5 countries 54 54
Share of top 10 countries 67 66
Source: World Bank data.

A.1) shows that the focus on India and China is less
marked and has fallen from 17 percent of all com-
mitments in fiscal 1996–2000 to 11 percent in fis-
cal 2001–05. This means that the transport share of
the India and China portfolios has been growing at
a time when their overall portfolios have been di-
minishing. In both cases this was driven by high-level
national government perceptions that aspects of
their development vision were being hampered
by insufficient transport infrastructure investment.
Bank transport commitments for the top 10 bor-
rowers have shown a marginal decrease over the
decade, from 67 to 66 percent (table 3.1), while
there has been a larger decrease in nontransport
commitments, 59 percent to 53 percent (appen-
dix A, table A.1). This means that overall the trans-
port sector is gradually increasing its share of
Bank lending to middle-income countries. While
this helps address concerns about the dwindling
demand overall for Bank loans from this group of
countries, it raises questions as to whether the bal-
ance between middle- and lower-income countries
is appropriate.
Twenty percent of transport commitments are to
upper-middle or high-income1 countries, 42 per-
cent are to lower-middle-income countries, and the
remaining 38 percent are to low-income countries
(less than $825 per capita), mostly financed
through IDA credits. IBRD
project outcomes are sim- In India and China, the
ilar to those of IDA, but on share of lending for
average the sustainability
of IBRD projects is supe-
transport has grown in
rior (77 versus 68 percent). a diminishing portfolio.
Although the IDA share has
been variable, in recent years it has accounted
for roughly one-third of transport commitments.
Final disbursements in aggregate are nearly always
lower than commitments, because in only a few
projects are all commitments actually used. This
can be because of changing needs and circum-
stances or because of exogenous factors affecting
the projects. During fiscal 1995–2005, about 83
percent of Middle East and North Africa Bank Re-
gion commitments were disbursed, compared
with 80 percent for East Asia and the Pacific, 78

21
A DECADE OF ACTION IN TRANSPORT

percent for Africa, 77 percent in South Asia, 60 per-
cent in Europe and Central Asia, and only 55 per-
cent for Latin America and the Caribbean.
The reasons for the lower levels of disbursement
in the latter two Regions include the cancellation,
scaling down, or curtailment of large projects in
countries such as Brazil, Colombia, Mexico, the
Russian Federation, and Turkey because of finan-
cial crises, changing circumstances, or, occasion-
ally, noncompliance with Bank requirements. IEG
background research indicates that transport proj-
ects are more vulnerable to postponement when
financial crises occur because the short-term im-
pacts are less visible and the repercussions more
politically manageable than for cutbacks in health,
education, and social spending.
Overall Project Performance
IEG ratings of the overall project outcome of
Transport Sector Board projects show that the
performance has been consistently better in com-
parison to nontransport projects (table 3.2). In the
most recent period, fiscal 2004–06, satisfactory
outcomes have been achieved at a level 10 per-
centage points higher than for all other Bank-
supported projects; sustainability is likely in 7 per-
cent more projects. However, the percentage of
projects with an institutional impact of substantial
or better that formerly exceeded the percentage
for all Bank-supported projects is now about the
same, in part reflecting a trend toward less chal-
lenging transport projects (see chapter 7).
An issue sometimes raised by clients or Bank staff
is that, although transport projects have been
performing better than projects in other sectors,
projects in the transport sector are relatively nar-
rowly focused. In other words, roads predominate
in the portfolio. There is also some evidence from
the Quality Assurance Group (QAG) and from
the results of the staff interviews that multifaceted
urban projects are sometimes avoided when
preparation time is lengthy—because of the need
to attend to many safeguard issues, multiple stake-
holders, and major environmental issues, thus
increasing the risk of failure.
Progress in institutional development has been at-
tributable at least in part to greater private sector
involvement and a more commercial approach
to road management (see chapters 4 and 5).

Table 3.2: IEG Ratings of Overall Project Outcome, Institutional Development, and Sustainability
by Exit Year, Fiscal 1992–2006 (Transport Sector Board projects versus all other Sector Boards)

Fiscal Fiscal Fiscal Fiscal Fiscal

IEG Rating Board 1992–94 1995–97 1998–2000 2001–03 2004–06
Outcome: Transport All projects 69 78 84 86 89
Moderately satisfactory Excluding large
or better (%) borrowersa 71 70 82 74 88
All other 64 67 68 72 79

Institutional Transport All projects 25 37 63 68 57

development: Excluding large
Substantial or better (%) borrowersa 27 33 57 66 50
All other 30 32 37 45 57

Sustainability:b Transport All projects 46 55 70 74 78

Likely or better (%) Excluding large
borrowersa 47 43 66 71 71
All other 44 47 54 64 71
Source: World Bank data. See also figures in appendix A.
a. Argentina, Brazil, China, and India.
b. Resilience to risks of future net benefit flows.

22
 BANK SUPPORT TO THE TRANSPORT SECTOR

Although sustainability ratings have shown steady quently carrying more than IEG ratings for transport
improvement, they are likely overstated for coun- 80 percent of passenger
projects have normally
tries with weak capacity. This is the category most kilometers and a significant
frequently downgraded in subsequent PPARs,2 percentage of freight ton- been better than for
where the assessments are usually made 2–4 years kilometers.3 Not surpris- other projects but are
after project closure. Overall, table 3.2 shows in ingly, a correspondingly
less satisfactory when
all categories lower ratings if the four largest large number of the trans-
clients are excluded; this is generally because port projects supported by the top four borrowers
such countries have substantial institutional ca- the Bank are also road proj- are excluded.
pacity compared with many poorer countries. ects (rural, urban, and in-
tercity), and in general the physical objectives of
Modal Comparisons these projects are implemented successfully.
The most striking aspect of table 3.3 and figure
A.4 in appendix A, showing the modal distribution Of the 97 Transport Sector Board road projects
of Bank commitments, is the predominance of the with specific physical upgrading and rehabilita-
road sector. For fiscal 2001–06 the percentage tion objectives completed and evaluated, 79
shares for railways (eight), aviation (three) and percent have been rated
ports (three) are relatively small. Urban trans- moderately successful or The transport sector is
port is mostly classified under “general trans- better on outcome (see relatively narrowly
port.” A deeper analysis shows, however, that if table 3.4). These results
urban roads and streets are added from the gen- were fairly equally distrib-
focused because roads
eral to the roads category, then the percentage uted through the various predominate; projects
share of transport commitments that are road regions. IEG’s records with a long preparation
related rises to almost 80 percent of the portfo- show that on average an
lio. Meanwhile, the shares for railway and port economic rate of return
time are sometimes
projects have slightly decreased, and those for avi- (ERR) of 29 percent was avoided.
ation and general transport have slightly increased. achieved during the past
10 years; sound supervision practices and advice
Roads from the Bank were often indicated in both ICRs
In virtually all countries, roads and highways are and PPARs as important reasons for the positive
the predominant form of land transport, fre- outcomes.

Table 3.3: IBRD/IDA Commitments for Transport ($ billions): Distribution

by Transport Mode, Fiscal 1995–2000 and Fiscal 2001–06

IBRD/IDA IBRD/IDA
commitments commitments
fiscal fiscal
Transport mode 1996–2000 (%) 2001–06 (%)
Roads 13.0 73 11.9 73
Railways 1.5 9 1.3 8
Ports 1.2 6 0.5 3
Aviation 0.1 0 0.5 3
General transport 2.2 12 2.2 13
Totala 17.9 100 16.3 100
Source: World Bank data.
Note: “Multimodal” projects have been redistributed among the appropriate modes.
a. Totals may not add up exactly as a result of rounding.

23
A DECADE OF ACTION IN TRANSPORT

Table 3.4: Transport Sector Board Projects, Fiscal 1995–2006: Analysis of

Performance by Physical Infrastructure Objectives

No. of No. of
closed objectives Rated
projects rated moderately
with physical moderately satisfactory
objectives satisfactory or better
Subobjective rated by IEG or better (%)
Roads and highways (greenfield) 14 11 78
Roads and highways (upgrading and rehabilitation) 51 40 78
Rural roads (local) 15 12 80
Urban roads 17 14 82
Aviation (public) 3 2 67
Ports and inland waterways 13 10 77
Railways 14 11 78
All physical infrastructure 127 100 79
Source: World Bank data.

Most road-upgrading Examples of good practice developing countries reviewed (World Bank 1988).
in road projects, whereby Having to rehabilitate paved roads too frequently
projects achieve their
sound design and construc- because of neglect could conservatively be more
physical goals. tion lead to positive ERRs, than three times as expensive for the road au-
stand out in many countries, thorities (based on undiscounted costs) as main-
including Armenia, China, Lao People’s Democratic taining them on a regular basis.4
Republic, Latvia, Nicaragua, and Peru. In Peru sig-
nificant improvements were made to rural ac- Despite the Bank’s emphasis on adequate and
cessibility, and transport tariffs for freight declined timely road maintenance, this objective was seldom
by between 9 percent and 15 percent. In Nicaragua satisfactorily accomplished. The limited funds al-
the project’s success was in part due to success- located to roads were often wasted through inef-
ful donor coordination. ficient work methods and too much spending on
new construction at the expense of the mainte-
A variety of mechanisms Cases do exist of outright nance budget. As a result, a high proportion of the
failure or very serious de- roads in developing countries remained in poor
has been introduced to
lays, but these are mainly condition.
improve maintenance. in countries that have ex-
perienced political instability such as Guinea- In response, the Bank in 1995 supported a new
Bissau, Haiti, Niger, and the Republic of Yemen. approach. By that time, governments in many
In the north of the Republic of Yemen the 157-km countries were beginning to improve the services
Harud-to-Huth road took more than 10 years to and efficiency of infrastructure by private sector
complete because of a combination of factors participation in road operations. This included
ranging from damage caused by flash floods, to maintenance by contract, competitive tendering,
slope instability problems, to civil disturbances that and improvements in management and ac-
eventually resulted in military protection being countability through the establishment of road
given to contractors to finish their work. agencies, funds, and boards.

As far back as 1988, the Bank estimated that road At the same time, scarcity of government tax rev-
infrastructure with a value of $45 billion had been enues encouraged some countries to seek alter-
lost because of inadequate maintenance in the 85 native financing mechanisms, such as toll con-
24

cessions and surcharges on fuel costs. In cases
where roads were carrying traffic volumes in ex-
cess of 10,000 vehicles per day, those roads were
potential candidates to be tolled to generate rev-
enue. This approach has developed significantly
over the decade, and the Bank has often played
the role of facilitating the right environment. IFC
has made commitments to only two toll roads dur-
ing fiscal 2001–05 (see chapter 4).
Through urban road projects the Bank has also be-
come involved with issues related to traffic con-
gestion, traffic management, and externality costs.
The pressure for additional road space is relentless,
with the pool of motor vehicles worldwide grow-
ing by 3 percent annually. Concerns increasingly
center on exhaust emissions, continued reliance
on fossil fuels, and a worsening road accident rate.
Railways
For nearly a century railways worldwide were at the
forefront of technology in passenger and freight
transport. But from the early 1930s their primacy
began to erode, with increasing competition from
other modes of transport. Rail technology has not
kept pace with competing transport technolo-
gies, but for the conveyance of bulk commodities
and the transport of goods in containers over long
distances, the mode remains competitive. For so-
cial or environmental reasons, many countries
continue to operate uneconomic rail services that
are dependent on subsidization, while others have
not invested sufficiently to replace aging infra-
structure, or have allowed the buildup of a rela-
tively large and unproductive labor force.
This situation is exacerbated in many developing
countries, especially in Africa, where railways were
originally constructed to carry mineral exports
from the interior to the coast and where volumes
of general freight are often insufficient to maintain
a viable service. Passenger traffic has to some ex-
tent shifted away from the railways, but in some de-
veloping countries, such as India, this mode
remains important for the mass movement of low-
income passengers. Indian Railways tariff policies
that overcharged freight to subsidize passenger
travel caused a loss of freight traffic to road trans-
port. However, the organization currently is un-
dergoing a major transformation.
BANK SUPPORT TO THE TRANSPORT SECTOR
Over the years the Bank has had mixed experiences
with railways. In 1993 an IEG review of lessons and
practices from railway projects showed that only
about half of the 40 projects completed between
1985 and 1992 were considered satisfactory (IEG
1993b). Principal reasons for the shortcomings
were insufficient authority of railway management
over rates; the lack of a commercial approach to
the transport market; re-
sistance to change by rail- Railways remain
way management, labor
competitive for
unions, and government in-
stitutions; inefficient op- transporting bulk goods,
erations; and the Bank’s but many countries still
reluctance to penalize fail- subsidize uneconomic
ure to comply with loan
covenants. Traffic in almost operations, especially
all the projects evaluated passenger services.
had been expected to grow
to some degree; yet in practice freight traffic de-
clined in more than half of these railway systems.
This rather sobering analysis led to greater selec-
tivity in railway projects whereby the potential
borrowers had to demonstrate their commitment
to a change process5 and more thorough prepara-
tory work had to be undertaken. There was also
growing interest in railway concessions following
the accomplishments in Argentina in the early
1990s and later in Brazil, in which the Bank was
involved. Although the Bank has supported a
number of railway privati-
zations, the preference in Limited success with
some parts of the world (es- railway projects led to
pecially Asia) is to continue
to support state-owned rail- increased selectivity in
ways. In such cases Bank the 1990s and better
policy permits assistance to results.
achieve more efficient and
effective operations of the public rail companies,
while encouraging opportunities for private sec-
tor participation and the privatization of noncore
businesses, where feasible.
In the countries of Eastern Europe and the Com-
monwealth of Independent States that are mak-
ing the transition from command to market
economies, there has been a major contraction in
the rail market. This was caused by the restruc-
turing of extractive and heavy industries at the
25
A DECADE OF ACTION IN TRANSPORT
same time that the privatization and subsequent
growth of road transport was occurring. In the
Russian Federation, which has by far the biggest
railway system, there has been extensive re-
thinking of the country’s future railway needs, sup-
ported by the Bank and other international
financial institutions.
Fourteen Transport Sector Board railway projects
approved during fiscal 1996–2005 have been
closed and rated by IEG. The overall percentage
of projects with a moderately satisfactory rating
or better on outcome is 78 percent. This was a sig-
nificant improvement over the earlier assessment,
following the tightening of railway appraisal pro-
cedures and improved support through the de-
velopment of a railway toolkit. If the seven railway
projects falling under other sector boards are
added, the percentage with a positive outcome rat-
ing is still 71 percent.
Most success has been achieved in the Latin Amer-
ica and the Caribbean Region, primarily in Brazil,
and in East Asia and Pacific; in fairness, however,
scrutiny of some of the projects in Asia shows
rather less demanding development objectives
(more focus on physical infrastructure and rolling
stock than on restructuring). An attempt at re-
structuring the railway in Indonesia was unsatis-
factory, mainly because of a change in government
priority after the Asian financial crisis. The Africa
Region also showed improved performance with
satisfactory projects in Côte d’Ivoire (where the
need for operating and capital subsidies was elim-
inated), Malawi, and Zambia. Reasons for some of
the less successful projects were mainly lack of
government commitment and inadequate prepa-
ration (as in Tanzania).
A major reason for the success of concessions
(see chapter 4) has been the Bank’s willingness
to fund retrenchment costs and
Bank willingness to programs to improve oppor-
fund retrenchment tunities for workers who now
costs has helped have to make a new livelihood.
A project for the Polish Rail-
improve the success of ways commencing in 2001 led
rail concessions. the way in this respect when
26
some 37,000 railway employees were redeployed.
This may be considered as best practice for rail-
way labor restructuring. Zambia is a good exam-
ple of a similar program in Africa.
Ports and Inland Waterways
The number of ports and inland waterway proj-
ects approved by IBRD/IDA has fallen slightly over
the past decade, but IFC commitments have in-
creased. Thirty projects involving ports, harbor op-
erations, and water transport and representing
nearly one-quarter of the IFC transport portfolio
by value were recorded during the study period
(see appendix D). IBRD/IDA has focused largely
on establishing appropriate regulatory frame-
works, helping secure transaction advisors (to
assist with the process of transferring operations
to the private sector), or advising on trade and fa-
cilitation projects.
Thirteen completed and evaluated projects relate
to ports and waterways. Successful outcomes are
evident in 77 percent of these projects. Best prac-
tice, on the basis of an outcome rating of highly
satisfactory in a PPAR, was found in Mauritius,
where the country’s trade competitiveness was
greatly enhanced through increased capacity, ef-
ficiency, and productivity.
Recently there has also been growth in the num-
ber of inland waterway projects in the active port-
folio, especially in China, and a major trade and
facilitation initiative has been undertaken in south-
east Europe. The ICR Review confirms satisfactory
progress on streamlining border crossing points,
with substantial savings in truck waiting time and
in the productivity of customs officials and other
border activities.
Aviation
While completed aviation projects are relatively
few in number, the extent of active projects has
shown an upswing in the past 3 years. This rising
interest in aviation is in part driven by increasing
concerns regarding safety and security.
For example, the Board recently approved the first
regional air transport safety and security project
 BANK SUPPORT TO THE TRANSPORT SECTOR

for West and Central Africa. All six Regions now in-
clude aviation projects in their portfolio and are
advised by a dedicated aviation specialist. IFC,
having made no commitments for airports and
airlines between fiscal 1990 and fiscal 2000, has
supported seven projects in the past 5 years,
committing $147 million. Aviation projects ac-
count for 26 percent of Multilateral Investment
Guarantee Agency (MIGA) exposure.
Regional Lending Trends
Figure 3.3 shows that the East Asia and Pacific,
South Asia, and Africa Regions have been the most
active of the Regions. The East Asia and Pacific
economy has grown by more than 7 percent an-
nually for the past 15 years, driven by the dramatic
growth of China, Malaysia, Thailand, and Vietnam.
Countries such as Cambodia and Lao PDR, however,
remain relatively poor. The increasing affordability
of motor vehicles in the high-growth nations is
straining existing transport capacity. Cities account
for 70 percent of the Region’s GDP growth, and this
trend is likely to continue. Decentralization has
brought new challenges in formerly centralized
economies such as Indonesia and the Philippines.
China remains the dominant borrower in the
East Asia and Pacific Region, with a Bank portfolio
that is almost 80 percent The Bank Group is
IBRD financed.
becoming more involved
The South Asia Region has in the aviation sector.
had average annual growth
rates of nearly 6 percent. The public sector re-
mains dominant in roads and urban passenger
transport. Treating the Region as a whole, how-
ever, obscures major intraregional differences in
institutional capacity, such as between India and
Bangladesh.
Africa has until recently The relatively high level
been another growth area
of activity in Africa is
for transport commitments
because the Bank realized intended to improve the
that excessive transport terms of trade and
costs continue to be a alleviate poverty.
hindrance to the Region’s
development (the Region
currently contributes less than 2 percent to total
world trade). The recent leveling off of commit-
ments is attributable, according to Bank man-
agement, to IDA constraints to funding in the
Region. Ethnic unrest and civil war have also
sometimes made it difficult for the Bank to pro-
vide effective support, but a strategy is in place to

Figure 3.3: Trends in IBRD/IDA Commitments for Transport by Region

1.2
1.0
US$ billion

0.8
0.6
0.4
0.2
0.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Fiscal year

Sub-Saharan Africa East Asia and Pacific Europe and Central Asia
Latin America and the Carribbean Middle East and North Africa South Asia

Source: World Bank data.

27
A DECADE OF ACTION IN TRANSPORT
move quickly when the situation in a country im-
proves, as in Angola and Liberia.
Until recently Europe and Central Asia experi-
enced only modest growth in transport commit-
ments, but IEG verified that more projects are now
in the pipeline. Here the emphasis has been on
the transition to market economies after the col-
lapse of the Council for Mutual Economic Assis-
tance and the breakup of the former Soviet Union.
The Middle East and North Africa Region, mean-
while, despite highly unstable geopolitical con-
ditions, has also seen a modest upturn in com-
mitments in support of strategies for accelerating
growth and employment. Yet the Region has lost
global market share in many export sectors, and
non-oil exports represent just 1 percent of the
world share. Although a number of factors have
contributed to this situation, improved transport
infrastructure will be needed to reverse this
position.
Only the Latin America and the Caribbean Re-
gion has seen a significant decline in commit-
ments, primarily because of fiscal space constraints
in several countries. The Bank Group’s response
in the transport sector has been to encourage
efficiency through greater private sector partici-
Figure 3.4: IEG Ratings for Outcome, Sustainability, and Institutional Development
(Appoval Year Fiscal 1995–2006)
100
80
Percentage
60
40
20
0
Sub-Saharan East Asia
Africa (79 projects and Pacific
rated) (44)
Outcome: moderately satisfactory or better
Institutional development: substantial or better
Source: World Bank data.
28
pation. The Region clearly needs to invest much
more in transport infrastructure, however, where
investment has halved since 1985 and the gap
with East Asia and Pacific is widening.
IFC’s transport portfolio is heavily focused on
Latin America and the Caribbean, which accounts
for 67 percent of transport commitments, com-
pared with 37 percent for other Regions. This
pattern of concentration in Latin America and
the Caribbean reflects good progress toward pri-
vatized infrastructure and transport services. Latin
America and the Caribbean also has a strong in-
stitutional and regulatory framework to support
private investment in the sector.
Regional Outcomes
If IEG performance ratings for outcome are com-
pared over the review period, the Middle East
and North Africa, Latin America and the Caribbean,
and East Asia and Pacific stand out (figure 3.4).
Only South Asia is lagging slightly. Sustainability
is most often rated likely in the Middle East and
North Africa, South Asia, and Latin America and
the Caribbean; Africa has the worst performance.
Institutional development impact has been most
substantial in Latin America and the Caribbean and
South Asia and least substantial in the Middle
East and North Africa.
Europe and Latin America Middle East South Asia
Central Asia and the and North (20)
(54) Carribbean (53) Africa (25)
Sustainability: likely or better

The overriding conclusion from staff and stake-
holder discussions on the Regional portfolios,
however, is that a customized approach to trans-
port investment in each Region is essential.
Regional and Donor Cooperation
The Bank works in close cooperation with other
multilateral development institutions.6 All such
institutions see the advantages of working to-
gether both formally and informally. But as the Joint
Evaluation of the Road Program in Ghana found,
there are often practical difficulties that have to be
overcome. The most notable example of this is the
need to clearly identify project contributions to na-
tional development objectives such as poverty re-
duction through a well-functioning monitoring
and evaluation system; there is also a need for
greater focus on institutional capacity building.
Donors sometimes have priorities that are not
necessarily “owned” by the client country. Prob-
lems also stem from different donor procedures
for implementation, monitoring, accounting, and
reporting (appendix B). The willingness to har-
monize these approaches deserves further ex-
ploration but will involve working through a series
of complex issues. An area of cooperation that has
attracted significant interest in recent years has
been the Sub-Saharan Africa Transport Policy Pro-
gram (SSATP) (see box 3.1).
In the past few years sector-wide approaches
(SWAps) and program-based approaches7 have
been introduced, whereby specific investments or
activities are developed in a country-led sector pro-
gram within a common multidonor development
framework. These programmatic approaches
show promise for enhanced development support
in transport and related sectors, but their out-
comes need to be fully evaluated over the next few
years. The advantages of pursuing SWAp arrange-
ments are stronger country ownership and lead-
ership, greater flexibility, better policy dialogue and
transparency between the partners and stake-
holders, greater focus on results in a programmatic
framework, economies of scale, and probably a
better approach to capacity building.
Some difficulties with SWAps encountered to date
in other sectors include problems in adapting
BANK SUPPORT TO THE TRANSPORT SECTOR
donor policies and proce- Donor coordination is
dures to SWAp require-
important and
ments, donors with agendas
specific to their own poli- sometimes excellent,
cies and mandates (it is but many practical
often easy to reach agree-
difficulties still have to
ment on overarching de-
velopment objectives; the be overcome.
difficulties arise in the de-
tails), and donors that find they can no longer
meet their original commitment or disbursement
targets. In all cases the importance of strong and
continuing leadership of such programs was
stressed. Transport sector SWAps have com-
menced in Brazil, China (Fujian), Mexico, Poland,
and Vietnam but as yet have not been completed
and evaluated.
Nonlending Assistance
Knowledge Management
In 1996 the Bank made a commitment to become
a global knowledge bank. To this end, it substan-
tially upgraded its information management sys-
tems, initiated a wide variety of new activities for
the aggregation and sharing of knowledge, and
aimed to foster a more open, knowledge-sharing
culture within its staff. This section looks at how
well the transport sector has responded to this
challenge.
An IEG evaluation on sharing Multidonor
knowledge (IEG 2003) con-
cluded that, overall, the Bank programmatic
had made more progress in approaches show
establishing the architecture promise.
to support its knowledge ini-
tiative than in creating the governance arrange-
ments and work processes to carry it out. The
assessment went on to say that the Bank needs to
move deliberately to embed knowledge sharing in
its core operational processes. It can do this by pro-
viding more direct support to task teams and
more knowledge capacity enhancement for clients.
An analysis of transport sec- The transport sector has
tor reports was undertaken
a low number of
for this evaluation cover-
ing research papers, sector knowledge products
reports, publications, and relative to other sectors.
29
A DECADE OF ACTION IN TRANSPORT
Box 3.1: Sub-Saharan Africa Transport Policy Program
The SSATP was launched in 1987 as a joint initiative of the Bank
and the United Nations Economic Commission for Africa with the
support of the donor community. It responded to the need for ac-
celerated improvement of transport sector performance in Africa.
The work program comprised a Road Management Initiative; Rural
Travel and Transport Project; urban transport, railway management,
trade and transport, and human resources and institutional de-
velopment. The last component, however, did not attract funding.
The program is managed by the Bank on behalf of the stakehold-
ers. Currently there are 31 active member countries.
In the late 1990s some donors reduced their budget allocations,
expressing concern about the program’s relevance, the degree of
accountability of program management, and the extent of involve-
ment of recipient partner countries. This led in 2001 to a strategic
review conducted by the Netherlands Economic Institute. The re-
view found that the program had become fragmented, with vari-
ous components being managed independently. Consequently, it
did not fully reflect the donors’ objectives to use SSATP as a plat-
form for integrating poverty-reduction issues; nor did it meet the
needs of member countries, which viewed the program as top down
and supply driven.
Despite these criticisms, none of the stakeholders wanted the
program discontinued because there was unanimous agreement
that it was an important platform for knowledge sharing, exchange
of good practice ideas, and networking. It also had the potential
to do much more. The Bank, for its part, acknowledged that it was
hampered because the program manager was only part time and
because frequent changes in program staff led to discontinuity in
coordination.
Sources: NEI 2001a, 2001b; World Bank 2003b, 2005e.
newsletters produced between 1995 and 2005.8
Table 3.5 shows that there were 437 documents
during this period covering transport sector is-
sues.9 In comparison with the Bank as a whole for
the same period, this represents just 4 percent of
all Bank knowledge documents—a rather low
percentage for a sector that accounts for 15 per-
cent to 20 percent of Bank lending. Moreover, as
the transport sector is highly heterogeneous, in-
volving multiple modes and themes, it might have
been expected to have had a greater share of an-
alytical output. The lack of a global program to co-
ordinate, finance, and support transport research
30
Since the review, however, there has been a considerable ef-
fort to upgrade governance and management of the program,
through improved transparency, accountability, and responsiveness.
The program agenda is back in the hands of the stakeholders and
partners, and its focus is primarily on the contributory role of trans-
port in Africa’s development, connecting with the aims of the New
Partnership for Africa’s Development. The Bank has installed a full-
time program manager as well as other specialist expertise and has
been active in supporting the long-term development plan for
2004–07, supported by a budget of $26 million.
A full independent evaluation is scheduled for 2007, although
it is not clear what outcomes would be measured, because the plan
focuses mainly on outputs. But nearly 75 percent of the Africa Re-
gion staff interviewed by IEG responded positively to the Bank’s con-
tinued involvement in the improved SSATP. They referred especially
to the solid progress of the Road Maintenance Initiative and to the
27 member countries operating road funds—most of which have
secured independently audited “ring-fenced” income sources—
and to the progress with railway concessions. Others mentioned
the heightened awareness of strategic planning, and all spoke of
dissemination (there are nearly 400 SSATP publications).
Not everyone was supportive, however. Critics were uncon-
vinced that the program was cost effective, observed that the
meetings were cumbersome, and noted that there is little appar-
ent connection between planning and implementation activities.
It is too soon for IEG to assess whether the revitalized SSATP is a
success.
for developing countries is a factor; other sectors
such as health and agriculture are not disadvan-
taged in this way. Industrial countries currently
conduct most existing transport research, and
comparatively little is directed at developing coun-
tries. Although the Bank’s role is not to fill this gap,
it can and does show leadership and does act as
a catalyst for research to be carried out when ap-
propriate. Table 3.5 shows no journal articles and
relatively few publications.
Prior to this evaluation, there had not been a de-
tailed review of the Bank’s literature for the trans-
 BANK SUPPORT TO THE TRANSPORT SECTOR

Table 3.5: Count of Research Papers, Sector Reports,

Publications, and Notes/Newsletters: Transport Sector
versus Other Sectors, 1995–2005

Transport
All Transport sector share
sectors sector (%)
All working papers 5,599 226 4.0
Sector reports 756 42 5.6
Publications 1,689 40 2.4
Newsletters/notes 1,908 129 6.8
Journal articles 25 0 0.0
Total 9,977 437 4.3
Source: World Bank data. Also see appendix G.

port sector. Reports that focused primarily on
transport were also poorly represented among
those sampled for the annual “Quality of Eco-
nomic and Sector Work” assessments10 conducted
by QAG between 1998 and 2002, although those
documents that were included received satisfac-
tory ratings overall.11
Knowledge Products
Africa is a major recipient of knowledge prod-
ucts (table 3.6); the Region’s widespread poverty
accounts for the large number of Poverty Reduc-
tion Strategy Papers (PRSPs). Europe and Central
Asia ranks second and has experienced demand
for the most Public Expenditure Reviews.
An analysis of 87 CAS Reports for the period fis-
cal 1994–2005 shows that while 79 provided rat-
ings for infrastructure, only 18 mentioned trans-
port specifically. The most frequently mentioned
transport issues raised in the CAS documents (ap-
pendix A, table A.3 has a full list) are fairly predict-
able and include the elimination of transport
bottlenecks, the need for in-
stitutional reform and capac- The lowest awareness
ity building, and inadequate of transport issues
financing for road mainte-
includes urban, social,
nance. More noteworthy are
the topics mentioned less fre- risk-management, and
quently. For example, much environmental
less is said about urban trans- concerns.
port planning and transport-
related aspects of the environment, social issues,
road safety, risk management, knowledge dis-
semination, and measuring project progress and
performance.

Table 3.6: Economic and Sector Work Strategy Documents by Region, 1995–2005

East Asia Europe and Latin American Middle East

and Central and the and South
Documents Africa Pacific Asia Caribbean North Africa Asia Total
CEM 10 13 19 19 7 9 77
PER 19 11 22 13 2 5 72
PRSP 25 5 9 4 1 3 47
CAS 50 21 42 37 12 11 173
Total 104 50 92 73 22 28 369
Source: World Bank data.
Note: CAS = Country Assistance Strategy; CEM = Country Economic Memorandum; PRSP = Poverty Reduction Strategy Paper; PER = Public Expenditure Review.

31
A DECADE OF ACTION IN TRANSPORT
Many of the CASs for the top 15 borrowing coun-
tries rated infrastructure as high, but only Brazil
and Ghana mentioned transport specifically. In the
Brazilian case, the issues are transport decen-
tralization, rehabilitation of state and federal paved
roads, privatization of rail freight, urban trans-
port, bottlenecks, and multimodal transport. In
Ghana inadequate roads are seen as a bottleneck
to agricultural marketing; the need to improve fi-
nancial management in the sector is also dis-
cussed. In general the issues raised as priorities
in the update of sector strategies are also rarely
raised in the context of transport, which is in-
dicative that an integrated approach involving
the transport sector is not “top of mind.”
Analytical and Advisory Assistance Including
Events and Technical Papers Prepared by
Operational Staff
In terms of analytical and advisory assistance
(AAA) support, the sector has witnessed a sharp
decline in economic and sector work (ESW) from
35 in fiscal 2005 to 19 in fiscal 2006. Technical as-
sistance initiatives also declined from 17 in fiscal
2005 to 9 in fiscal 2006. Though the quantity rel-
ative to many other sectors is small, there have
nevertheless been some significant papers, pre-
sentations, analyses, and workshops by Bank
transport staff and outside experts. Several of the
peer-reviewed papers and publications are rec-
ognized as having made an important contribu-
tion to transport development knowledge.
Examples are papers on road funds, railway re-
form, reduction of vehicle air pollution, trans-
port decentralization, and road safety.
In IEG’s view, two main factors emerge from this
work. One is that the poorer countries are much
less well covered than the
Pioneering work has middle-income countries;
been undertaken in the other is that more work
Brazil in support of is needed in the areas that
will present major chal-
transport privatization lenges in the future. Some
initiatives. specific examples follow.
In India, the more important AAA work covers
presentations on railway restructuring experi-
32
ences, road financing and rural roads, urban trans-
port strategy, and a comparison of strategic road
planning approaches between India and China. A
report entitled India’s Transport Sector: The Chal-
lenges Ahead (World Bank 2002c) has probably had
the most impact, because it was prepared on the
basis of extensive consultations with senior cen-
tral and state government officials, private insti-
tutions, and many experts. Judging by the extent
of consultation, it is likely that the analysis and rec-
ommendations are shared by the majority of the
participants. Many of the road and port propos-
als have been carried out, although the move to-
ward rail reform is only now commencing.
In Latin America and the Caribbean the Bank has
been particularly active in Brazil, where 11 policy
and analytical reports have been produced since
fiscal 1995. These reports are associated with all
the areas of transport in which the government of
Brazil has promoted privatization initiatives. In-
dications from the Brazilian stakeholders’ survey
show that the Bank has had close and positive dia-
logue with the relevant decision makers. Because
this assistance was backed by large loans, the Bank
also had strong credibility. The studies focused on
the railways, multimodal freight transport, and
urban transport reform. Bus/metro integration
and, in Recife, the establishment of a body that
could coordinate all public transport services are
considered pioneering works in the Region.
In the Russian Federation and Commonwealth of
Independent States countries’ sustainable urban
transport policies and railway restructuring were
among many topics discussed. Some of this work
resulted in papers useful for more general appli-
cation, such as how to implement reforms nec-
essary to deregulate, liberalize, and accelerate
privatization and how to improve urban trans-
port institutional capacity, introduce appropriate
funding mechanisms, and establish fare levels for
public transport. In the Europe and Central Asia
Region generally, the emphasis has been on a
smaller role for government and improvements
in the climate for private participation. Specific pa-
pers were prepared for Poland and Kazakhstan,
among others.

In Africa, the IEG country case study of Tanzania
shows a somewhat different perspective. In the
past 25 years the Bank has not carried out a for-
mal piece of sector work either for the transport
sector as a whole or for individual transport modes.
However, other mechanisms have been used to de-
velop policy options. Some SSATP papers focused
specifically on Tanzania, such as one that analyzed
road sector reforms and another that focused on
nonmotorized transport. In addition, the privati-
zation program (ports and railways) was analyzed
in documents prepared under the Bank’s public
sector program. The SSATP plays an important role
in dissemination in Africa at a strategic level, but
it is independent from the Bank activities.
There are also several papers and guidelines by in-
dividual Bank staff and other transport experts that
the Sector Board recommends for staff guidance.
The more important of these can be accessed from
the transport Web site and have been rigorously
peer reviewed; these Web sites also contain tool-
kits and useful links to other Web sites. All Regions
and a few country offices (including India, Turkey,
and Vietnam) have made an effort to provide trans-
port information on their country Web sites.
The Bank’s transport AAA work, based on com-
ments in the literature, stakeholder feedback,
and IEG judgment, appears in general to be of
good quality, covering both sector and policy sup-
port. However, it tends to focus on the larger
countries such as Argentina, Brazil, China, Mex-
ico, Poland, and the Russian Federation to the
detriment of the smaller ones (exceptions are
Lao PDR and the Pacific islands). In addition, the
technical assistance or policy analysis compo-
nents (according to many of the staff interviewed)
would not have succeeded without being linked
to investments in physical assets, which make
the often painful organizational and policy changes
recommended more palatable to implement (for
example, the development of second-generation
road funds in Sub-Saharan Africa and the urban
transport institutional reforms in Brazil).
The degree of success of Bank-financed technical
assistance studies is mixed, according to clients’
BANK SUPPORT TO THE TRANSPORT SECTOR
perceptions of their relevance and value. Some-
times, as in China, the former Yugoslav Republic
of Macedonia, Vietnam, and the Republic of
Yemen, not all the studies were viewed as useful;
they either commenced late or the recommen-
dations were not pursued. Some studies prepared
by consultants were too voluminous and techni-
cal to be easily understood and displayed inade-
quate regard for political and financial feasibility.
In contrast, the Russian Quality analytical
Federation urban transport
work has been
study was extended to allow
for additional studies on rail- important to progress
ways and national roads, and on institutional reform.
further advisory work on
urban transport issues was carried out simulta-
neously using other funds. IFC has also supported
the transport sector with technical assistance and
advisory services delivered by its Trust Funds
(TATF) and Advisory Service Departments. Be-
tween fiscal 1990 and 2005, TATF supported 39
projects with a total cost of $5 million. Typically,
TATF projects were related to privatizations and
feasibility studies on private operation of ports and
shipping, air transport, and cargo facilities.
Training and Dissemination
The sector board has overall responsibility for
transport learning and knowledge management.
It sponsors various events for the purpose of
learning, exchanging information, and supporting
strategy formulation (appendix G); it also main-
tains the Bank’s transport
Web site, which has been The Sector Board
substantially upgraded. An is still developing
earlier attempt to create a
knowledge asset database
a knowledge-
was abandoned; all informa- dissemination plan.
tion is now filed in the Bank’s
electronic filing system. The sector is still work-
ing toward a formal knowledge-dissemination
plan and a system for capturing all presentations
originating from country offices.
The World Bank Institute (WBI) is the learning arm
of the Bank. WBI aims to help its clients prepare
for the knowledge-based economy by designing
33
A DECADE OF ACTION IN TRANSPORT
and delivering courses and seminars, promoting
knowledge networks and communities of practice,
and providing policy and strategic advice. Train-
ing and policy dialogue relating to the transport
sector conducted by WBI over the past 8 years has
been focused heavily on competition and regu-
lation issues. This in part reflects the knowledge
of WBI staff, whose exper-
The transport-related tise is primarily in financial
output of WBI does not modeling, regulation, and
appear to be fully institutional arrangements,
including how to establish
aligned with the needs successful public-private
of transport operations. partnerships (PPPs).
Twenty-seven WBI transport-related events were
conducted between October 1997 and March
2005. The attendees have primarily been senior
and middle management government officials.
Although these events have been well received,
based on the feedback obtained at the conclusion
of the seminars, only one of the events was sub-
jected to a “level-two” evaluation by the WBI Eval-
uation Group.12
There is an apparent lack of connection between
the needs of transport operations and the out-
put of WBI. There is also no dedicated program
for transport, and it is unclear whether the WBI
focus countries align with transport sector prior-
ities, because transport in some cases has not fea-
tured strongly in some country strategies. WBI
does not have transport skills outside the narrow
area described above, and there is limited inter-
action between WBI and the Transport Sector
Board. To make up for this
Some country limited coverage, the net-
stakeholders criticize work has developed links
the Bank for with some specialist part-
ners promoting particular
ineffective knowledge areas of training in devel-
dissemination. oping countries.13
Despite all the publications and presentations
mentioned in this chapter, all three country stake-
holder opinion assessments undertaken as part
of this evaluation contained some degree of crit-
icism about effective knowledge dissemination. In
Brazil only 4 of 18 stakeholder respondents un-
34
equivocally ranked Bank dissemination highly,
while 3 thought it was ineffective. The remaining
stakeholders thought dissemination was satis-
factory, but with caveats—the biggest of which was
that few documents were available in Portuguese.
Cities on the Move was, however, translated into
Portuguese with the help of the Bank Country Of-
fice and São Paulo; thousands of copies were sub-
sequently distributed to Brazilian professionals,
students, universities, and to other lusophone
countries. Most respondents suggested that a
more structured country approach was needed
that involved government, academics, and stake-
holders, taking advantage of local transport events.
In Tanzania the feedback contained the following
comment:
The Bank has not been effective in dis-
seminating its know-how. Bank experts
are very knowledgeable but meet and share
their experiences with relatively few people.
Stakeholders often do not have ready ac-
cess to publications and newsletters and the
Internet is not accessible by some people.
In the Indian survey, the perceptions on dissem-
ination were much more positive (reflecting the
fact that more activity is taking place there). How-
ever, even here it was said that there was insuffi-
cient priority given to urban and intermodal
transport issues.
The staff interviews in the Bank transport network
also elicited some interesting comments, such
as, “We need to disseminate more effectively, but
we are all too busy to share innovation suc-
cessfully,” “We need less pressure [on task team
leaders]—then we can improve operational
quality and dissemination effectiveness and en-
sure we stay abreast of developments in our
field,” and “We now lack the depth of interna-
tionally renowned experts who have led inno-
vative thinking in the past.”14
These comments suggest that the right balance
between projects and advisory work has not yet
been achieved. Certainly at the Regional level,
management has not yet considered knowledge

sharing as a way of doing business through em-
bedding it in core lending and nonlending
processes. Relatively few CASs contain knowledge-
sharing objectives and strategies, and many staff
members believe that they lack incentives to
make knowledge sharing a routine part of their
work.
IEG believes that regular discussions with clients
to customize their knowledge requirements could
also lead to better opportunities for policy dia-
logue. Such dialogue is also pursued through the
lending projects themselves—but this is not
recorded.
BANK SUPPORT TO THE TRANSPORT SECTOR
Results from the stakeholder At a Regional level,
interviews indicate that non-
management has not
lending assistance in the
transport sector is of good yet accepted knowledge
quality, but in quantity it is sharing as a way of
insufficient, compared with doing business.
the rest of the Bank. It needs
to be planned more strategically with better re-
sources and more interaction with both staff and
clients if it is to progress beyond its present sta-
tus. This implies that more effective sharing of re-
sources between networks is necessary. Clearly the
recent merging of the Infrastructure with the
ESSD Network is a positive step in that direction.
35
 Chapter 4: Evaluation Highlights

• Greater involvement of the private sector has often led to improved

performance and better service.
• Six middle-income countries account for 80 percent of private sec-
tor transport infrastructure investment.
• In many cases, urban passenger services could be improved by
better-regulated private sector competition.
• The Bank has made a major contribution to the roads subsector by
promoting private sector road and maintenance management.
• IFC has increased its investments in transport.
• There must be sufficient local capacity to engage with the private
sector and a supportive regulatory framework.
• Corporatization can succeed if accompanied by a variety of other
reforms.
 4
Promoting Private
Sector Involvement
A
lthough experience shows that in some circumstances greater use
of the private sector can achieve considerable efficiencies, this is a
complex and sensitive area and client commitment to such changes
is crucial.
The balance between the public and private sec-
tor roles in transport varies by country, depend-
ing on history, culture, sociopolitical circumstances,
and policy choices that may, for example, place a
high premium on national security, including own-
ership of national assets. However, because pri-
vately owned transport services are widespread
and usually successful, the Bank has encouraged
such services, either within a competitive market
or, where the market is more restricted, within the
support of an appropriate regulatory framework.
Government provision of such services has fre-
quently been found deficient in technical and al-
locative efficiency. Privately owned transport
infrastructure, in contrast, is much less common
for a number of reasons, including its monopo-
listic nature, financial returns that are often very
long term (and therefore risky), and the dis-
putable perception that the public good can only
be assured by public ownership.
The levels at which the balance between the pub-
lic and private sectors in transport can be changed
are oversight, execution, and finance. Oversight
generally involves user participation in the plan-
ning and regulatory as- Improvements in the
pects of sector operations.
provision of transport
Execution refers mainly
to how institutions actu- services require the right
ally undertake their work, balance of private and
including the extent to
public sector reforms.
which public institutions
subcontract to private en-
terprises and how they do this. Finance means the
level at which the private enterprise provides some
or all of the capital financing that would otherwise
have come from the public sector.
At one end of the spectrum are government de-
partments that execute the work with their own
labor forces; at the opposite end are private en-
terprises that fully undertake this responsibility.
In between are many alternative structures for the
assignment of risks and responsibilities at the
management level (see appendix A, table A.5).1
International Trends in Privatization
A detailed review of worldwide experience in
transport privatization was used to provide a
benchmark for best practice in achieving public
and private sector balance. The Bank’s activities
37
A DECADE OF ACTION IN TRANSPORT
Early expectations for are assessed against the
benchmark. (See summary
the extent of private
of this work in appendix B.)
sector investment were
overly optimistic. As already noted, in the
early 1990s there were ex-
pectations that the private sector would play a sub-
stantially more significant role in the provision of
transport infrastructure and services. Some of
these expectations, especially regarding infra-
structure, were impractical, and the authors of Sus-
tainable Transport (World Bank 1996), while
supporting an expanded role for the private sec-
tor, were cautious about the extent to which the
private sector could increase its role. The Bank has
a PPI database that tracks infrastructure projects
in developing countries involving private partic-
ipation in funding and risk taking.2
The period fiscal 1995–2005 was very volatile.
Despite early growth, it peaked in 1997 with a total
expected transport investment of $18.4 billion,
then plunged to $2.9 billion
Six middle-income in 2002. In 2005 it recov-
countries account for 80 ered, rising to $16.2 billion.
percent of private sector During 2005 significant new
private sector investments
transport infrastructure were recorded for Hungary,
investment in the India, and Turkey, with avi-
developing world. ation and port projects
strongly featured.
The PPI database does present an optimistic pic-
ture, because it represents commitments rather
than actual disbursements.3 It also excludes follow-
on and locally financed activities, some of which
are funded by the private sector.4 Just six countries
(Argentina, Brazil, Chile, China, Malaysia, and Mex-
ico) accounted for nearly 80 percent of total in-
vestment over the decade. Thus, the remaining 20
percent is distributed among all other developing
countries, with many having no significant pri-
vate investment at all. Compilations by the Chilean
Central Bank for the six main Latin American
economies show a similar pattern, relative to the
smaller countries in the Region.
This does not necessarily mean that attracting
private sector investment is less relevant for lower-
38
income countries. One or two projects can have
a very significant impact, as has been the case in
Cambodia and Mozambique. In the latter coun-
try, the railways and port restructuring project is
also benefiting neighboring states by reducing
Regional transport costs.
There has been important progress in recent years
in the institutional design arrangements in the
Organisation for Economic Co-operation and De-
velopment (OECD) countries. Examples include
the establishment of a highways agency and the
railway reorganization in the United Kingdom,
Australia’s rail privatizations, and the broadening
of responsibilities assigned to the Australian Na-
tional Road Transport Commission, as well as new
methods of bus contracting in Norway and other
European countries. Some of these internationally
recognized successes have since been adapted in
privatization initiatives in developing countries. It
is noteworthy, however, that major weaknesses
that emerged in some of the earliest privatization
efforts—such as Chile’s urban public transport
reforms, Argentina’s freight railway concessions,
and Mexico’s toll roads—have largely been avoided
in the reform efforts introduced by developing
countries in the past 10 years. It is also generally
recognized that effective institutional change takes
time.
The most clearly positive effects of the WDR prin-
ciples on efficiency have been in the roads field.
Those principles have been applied to the man-
agement of road networks generally and strongly
promoted by the Bank. This has included im-
provements in road department accountability,
often through the establishment of road agen-
cies and road funds; contracting out to the private
sector has also occurred, not only for construction
and rehabilitation but also for routine mainte-
nance, design, and general supervision. Trans-
parently competitive tendering of works against
performance-based specifications has been a sig-
nificant step forward.
In contrast with these reforms, which are largely
aimed at improving the quality of public spend-
ing, toll roads have offered opportunities for
attracting more private investment into the

development of road networks. Growth of pri-
vately financed toll facilities has been an impor-
tant phenomenon during the decade. In a few
developing countries, there are now substantial
numbers of such roads, and many other countries
have at least one or two. Although such roads rep-
resent only small proportions of each network,
they often carry significant proportions of over-
all traffic.
There is considerable evidence that the pursuit of
increased private sector involvement in trade-
related port and railway infrastructure has had
positive effects on both technical and allocative
efficiency. This has been the case even where
substantial modifications have subsequently had
to be made to the original structures chosen for
increased private participation (as in the railways
in Britain). Positive impacts have often been fur-
ther enhanced by subsequent effects on other
institutions in the same field, such as in India’s
Nhava Sheva container terminal, or through the
postprivatization restructurings that occurred in
the railways of Australia, southeast Brazil, and
northeast Mexico.
Efficiency and service indicators have typically
shown sustained improvement, and traffic growth
has tended to exceed that of the regional econ-
omy, reflecting in part the attraction of traffic pre-
viously handled by other modes and facilities.
Analyzing worldwide movements of containers
through ports, it has been estimated (Estache
and Serebrisky 2004) that the share handled by
public sector operators dropped from around 42
percent in 1991 to 27 percent by 2001.
Overly centralized, government-owned and
-operated urban passenger services, torn between
conflicting objectives, still exist in many cities.
Such services would often benefit greatly from
rationalization and restructuring. A more common
challenge is to develop better-regulated competi-
tion among existing private providers to generate
a more reliable and safer set of services that link
appropriately with one another. This scenario typ-
ically exists in the difficult context of rapidly in-
creasing city size and worsening street congestion.
P R O M O T I N G P R I VAT E S E C T O R I N V E S T M E N T
Such regulated competition Developed country
is usually brought about
successes have
through an urban public
transit authority that will in- been adapted to
troduce competitive con- privatization initiatives
cessions and franchises with in developing countries
specific performance objec-
tives, but within an inte-
with some good results.
grated system.
Finally, the pressures of increasingly open com-
petition in the provision of international and do-
mestic air services have brought measurable
improvements to the technical efficiency of air
transport. The rise of low-
cost carriers, now extending Efficiency and service
to many of the larger de- indicators have been
veloping countries in Asia
and Latin America, has also
improved by private
contributed to transport’s sector involvement in
allocative efficiency. Private ports and railways.
management of public air-
ports is a relatively recent innovation; whether it
has contributed to these efficiency improvements
is not yet clear.
At the broadest level, the review finds that the
strategy suggested in the WDR has stood the test
of time in OECD countries. In developing countries
there is also evidence that greater involvement of
the private sector, especially
in service provision, usually Urban passenger
leads to a significant im- services in many cases
provement in transport
could be improved by
sector performance. Never-
theless, for the foreseeable better-regulated private
future, the public sector in sector competition.
developing countries will re-
main the principal provider of infrastructure
because of investment risk factors and public own-
ership issues.
Bank Performance in Encouraging
Private Sector Involvement
The Bank’s experience in encouraging the private
sector through its own lending and support pro-
grams is now compared against the above as-
sessment (table 4.1).
39
A DECADE OF ACTION IN TRANSPORT
Table 4.1: Analysis of Performance by Private Sector Development Objectives,
Transport Sector Board Projects, Fiscal 1995–2006
Subobjective
Ports and port restructuring
BOT (roads)
Maintenance by contract
Railway restructuring
All PSD
Source: World Bank data.
Note: BOT = build, operate, and transfer project; PSD = private sector development.
Road Concessions
Sector Performance
The Bank has accumulated a significant amount
of knowledge about PPPs and is asked with in-
creasing frequency for technical advice on such
projects by its clients. During the review period,
however, the Bank was directly involved with
the establishment of relatively few toll-road proj-
ects. Of course, part of the reason for this is that
roads are viable for tolling only where traffic
volumes are high and local institutional capacity
is sufficient to effectively engage with the pri-
vate sector. In some middle-income countries
the use of tolls in PPP projects has matured suf-
ficiently so that neither the
The Bank’s advice client nor the private finan-
on such PPPs is ciers see a need for Bank
frequently sought. Group support. The Bank’s
expertise is nevertheless ac-
tively sought in many other cases, including
greenfield construction projects.
In Brazil, for example, a Bank review of the high-
way concession program involving six state au-
thorities was undertaken. IEG concluded in a
PPAR evaluation of this initiative that the Bank had
given useful advice at both federal and state lev-
els at a critical time. Typically, the Bank has given
support to many countries on land-acquisition
processes and tariff setting or has offered partial
risk guarantees.
40
Objectives rated moderately
No. of PSD satisfactory or better
objectives
rated by IEG Number Percent
9 6 67
5 4 80
34 27 79
14 11 79
62 48 77
Europe and Central Asia is an interesting case be-
cause initially the Bank did not support the first
wave of PPPs in the Region, many of which were
deemed likely to fail. However, the Bank has more
recently developed innovative solutions, such as re-
imbursable technical assistance, to assist its clients
in, for example, the Russian Federation and Hun-
gary. To ensure a comprehensive analytical and
advisory program, the Bank has developed a fee-
for-service arrangement aimed at strengthening
local capacity. This was used in the city of Saint Pe-
tersburg during the construction of its high-speed
ring road. There is interest by governments in the
Region in extending this type of service to cover
Regional growth trends, economic competitive-
ness, investment climate monitoring and bench-
marking, and asset management services.
Project Performance
Positive development outcomes have been in sup-
port of build, operate, and transfer (BOT) projects
in Benin, Chile, China (box 4.1), and India. All
have made satisfactory progress and Bank support
has enhanced project performance.
The only unsuccessful project involved a Bank loan
to Colombia to finance the government’s capital
contribution to a toll concession project. This
was among the first operations to use Bank sup-
port for a privately funded project. The support
came through credit enhancement instruments

Box 4.1: Mobilizing Private Finance for Road Development in China
Toll roads began to appear in China in the 1980s, when the central
finance ministry began requiring provinces to accept full respon-
sibility for payment of debt service on loans from which they ben-
efited. But acceptance of the principle that roads could earn
revenue directly also opened the way to private participation.
Today, China has more tolled roadway than any other country,
probably near 20,000 km.
Given the importance central government placed on roads—
in the last years of the 1990s road investment reached 2.5 percent
of GDP—the provinces have eagerly sought new ways to sup-
plement their budgetary funds. Promoters of private finance re-
sponded imaginatively, and the market developed, often in parallel
with the legislative changes that would make it fully legal. By the
late 1990s, 5 percent to 9 percent of the funds going into road de-
velopment were from private sources.
The original mechanism for private financing was the joint ven-
ture. Joint ventures occurred mainly with private partners from Hong
Kong and public management and staff provided by the Provincial
Communication Department (PCD). The Hong Kong promoters ne-
gotiated special agreements to compensate for the uncertain legal
environment and sometimes carried out the construction work. From
the mid-1990s, and especially after approval of a new highway law
in 1997, a second source of private capital rapidly developed—the
Hong Kong, Shenzhen, and Shanghai stock markets.
Investor interest in road transport was strong. Holding com-
panies, mainly provincial expressway development companies, as-
sembled packages of already operating toll roads and floated
shares for some 20 percent to 40 percent of the aggregate value
of the roads.
Sources: Bellier and Zhou (2003); CPCS China Merchant Consulting (2003); Ojiro (2003); Wood (2002).
offered at the bidding stage. The successful bid-
der requested the lowest government capital con-
tribution, nearly $83 million short of the next
highest bidder. But it did not request any of the
other support instruments available. Unfortu-
nately, construction was significantly delayed, and
then a dispute arose between the concessionaire
and the national roads agency over a proposed
change in the road alignment. In June 2000 alle-
gations of a breach of contract led to litigation. The
early termination of the concession made it im-
possible for the project to attain the develop-
ment objectives in the manner and time agreed.
P R O M O T I N G P R I VAT E S E C T O R I N V E S T M E N T
By 2002, 18 Chinese companies had successfully listed, in ad-
dition to the three main Hong Kong promoters. Several of the
provinces have been able to reinvest substantial proceeds into fur-
ther road development. Some of the stronger companies have
also been able to float revenue bonds and to raise bank loans se-
cured against their revenue streams. Initiatives to develop BOT proj-
ects, though welcomed by the central authorities for their
efficiency-increasing potential, have not so far won significant
support among PCDs.
Insufficient information is available to permit a full assessment
of the impact the private participation has had on the technical and
allocative efficiency of these toll-road operations. However, re-
garding allocative efficiency, concern is widespread and rising that
PCDs and private promoters have often pushed toll rates to levels
that divert substantial traffic to other roads. The problem is par-
ticularly serious for heavily laden trucks, which would usually
cause far less damage on the stronger pavements of the new
roads than on the old roads to which they divert.
A partial solution has been to introduce tolls on the competing
roads as well. The Jiangsu Expressway Company followed its
completion of the Huning expressway in 1996 with the purchase
of 15-year operating rights on the parallel Ninghu highway so that
it could itself adjust the tolls on both. Although it seems that too
much weight is given to financial profitability over maximization of
economic benefits in setting toll levels, this is more a problem of
the existing toll system than of the private participation in it. Inso-
far as the latter introduces incremental capital, permitting faster
expansion of the road network, it should have some beneficial al-
locative consequences.
IFC commitments for roads during the study pe-
riod have been relatively small and declining—10
projects, of which 8 were completed during fis-
cal 1996–2000 ($190 million committed) and only
2 between fiscal years 2001 and 2005 ($64 million
committed). The first transport project insured by
MIGA was in 1995 (see appendix C).
Other Roads
Sector Performance
The Bank’s main contribution to the road sub-
sector, however, has not been through conces-
41
A DECADE OF ACTION IN TRANSPORT
The Bank’s main sions, but through the en-
couragement of private sector
contribution in roads
involvement in road and
has been the promotion maintenance management.
of private sector road Examples include the clarifi-
and maintenance cation of road department ac-
countability, often reinforced
management. by the greater management
autonomy that is created
from establishing a roads agency separate from its
supervising ministry; appointment of oversight
and consultative bodies more representative of
users and the commissioning of periodic user
opinion surveys on the state of the network and
adequacy of service; development of network-
wide-planning systems for efficient allocation of
expenditures and the setting up of high-quality
data banks to underpin them; transparently com-
petitive contracting to the private sector, not only
of construction and major maintenance but also of
routine maintenance, design, and general super-
vision; and the shift to multiyear contracts with re-
muneration related to the level of service afforded
by the assets built or maintained.
Project Performance
Twenty-two of 26 (87 percent) closed projects
with the above objectives achieved satisfactory out-
come ratings—by any standard an excellent per-
formance. More detail on performance is given in
the next chapter on sustainability.
Railways
Seventy-one percent of evaluated railway proj-
ects (from all sector boards) with major re-
structuring, private sector participation, and/or
concession objectives were successful. Brazil,
Mexico, and Romania were among the best ex-
amples; the outcomes in Indonesia and Tanzania
were unsatisfactory.
Government Government commitment
and realism was a common
commitment has been
thread in the successful proj-
the key to success in ects. The government of
railway concessions. Brazil achieved its overall ob-
jective of reducing the cost of
rail freight from $2.9 per ton-km to $1.6 per ton-
km. In Mexico, traffic increased, equipment was
42
better utilized, safety improved dramatically, and
all concessionaires generated income covering
operating costs without affecting investment re-
quirements. The outcome of the Romanian rail-
way project was rated highly satisfactory because
it fully achieved its objectives. Most noncore ac-
tivities were separated from the operating com-
panies. With regard to urban rail and subway
concessions, the achievements in Buenos Aires
and Rio de Janeiro were groundbreaking and
have proved to be sustainable over the past
decade.
Lessons from the difficulties in the Tanzanian Rail-
ways Corporation project were to not make the
original bid condition too onerous and to ensure
adequate remuneration for services that are not
economically viable. This deterred potential in-
vestors from submitting compliant bids. How-
ever, the Bank has persevered. In a second round
of bids the requirements have been softened.
This new round also offers an option to obtain a
World Bank Partial Risk Guarantee that will pro-
tect the operator should the asset-holding com-
pany fail to meet its obligations.
A recent review of railway concessions in Sub-
Saharan Africa found no evidence of excessive
profiteering; in fact, it suggested that increasing
rail competition benefited transport users first
and foremost through lower road transport costs
(World Bank 2006g). IEG also notes that the true
costs of track renewal need to be acknowledged
up front, so that a seemingly favorable debt struc-
ture does not mask obligations in future years.
Railway projects in the Europe and Central Asia Re-
gion have met with mixed success. Romania had
a highly satisfactory project in which a new regu-
latory and organizational framework was intro-
duced, substantial progress was also made with
financial restructuring, and staff size was reduced
by 47 percent. Bulgaria and Croatia were relatively
less successful because the authorities did not
show the same determination to make necessary
but difficult changes. Because these projects are
strongly influenced by the European Union (EU)
restructuring model, which is now being pro-
moted beyond the Region, it would be useful to

assess the performance of this cluster of railway
systems in aggregate in the near future to see
what lessons can be derived.
Many countries are not yet prepared to take the
full step toward long-term concessions and pre-
fer to pursue restructuring within the public sec-
tor. Bank experience, confirmed by IEG, suggests
that corporatization alone is insufficient to make
any significant difference. If accompanied by a
well-thought-out package of reforms, however, it
can result in a much more efficient organization.
Typical components of such a package would in-
clude how the public shareholder (responsible
minister) discharges the duties of performance ac-
countability and meets social obligations. The se-
lection of the board and senior management
should be based on merit, and the lines of busi-
ness structure should have segmented responsi-
bility for management and accounts. Business
plans should include a strategy to enhance service
and improve productivity, while investments
should be aimed at creating competitive advantage
in specific markets. Activities that are not part of
the core business should be competitively pro-
cured. Client countries that have successfully fol-
lowed this reform process include Morocco,
Poland, and Romania. Railway reforms in Asia also
occurred but to date have been more limited in
scope. IFC commitments for rail freight and pas-
senger operations during the study period have
increased from five projects in fiscal 1996–2000
($52 million committed) to nine projects in fiscal
2001–05 ($202 million committed); outcomes
have been mixed.
Ports
During the fiscal 1996–2005 period IBRD/IDA was
involved in 13 completed and evaluated port and
waterway projects; 77 percent rated satisfactory
or better on outcome. The Bank Group encour-
ages a commercial approach through the sepa-
ration of the landlord and operating functions. In
this approach the public sector landlord is re-
sponsible for maintaining the channels, wharves,
utilities, and common areas, while services such
as cargo handling and tug services are contracted
out to the private sector.
P R O M O T I N G P R I VAT E S E C T O R I N V E S T M E N T
Before this can happen, a The Bank Group has
new regulatory and admin-
encouraged the
istrative framework usually
has to be set up. Such proj- separation of the port
ects also provide an oppor- landlord and operating
tunity to introduce physical functions.
improvements such as new
or rehabilitated berths, stor-
age facilities, and cranes (Albania, Korea, and Mau-
ritius); improved customs and security facilities and
procedures (Tanzania); “freeport” facilities (Mau-
ritius);5 and asset management systems (Poland).
Container terminals are also often privatized as sep-
arate entities (Cameroon and Tanzania). Typically,
the investments lead to greater volumes of traffic
handled, with fewer delays and improved port
handling productivity.
Only a few problem instances have been recorded;
these include a delay on decisions about the in-
troduction of additional cargo handling compa-
nies (to increase competitiveness), failure to invest
in additional crane capacity as traffic increases, and
overestimating expected traffic volumes at ap-
praisal. The high success rate overall is because
such concessions are normally profitable, the
need for retrenchments is usually modest, and the
investments are focused in one location.
During the review period The Bank Group has
the IFC also made commit-
ments of some $427 million
provided effective
to 30 port and harbor op- support for establishing
erations. Bearing in mind the regulatory and
that IFC commitments de-
administrative
pend on many factors, IFC’s
contribution actually sup- framework for port
ported total project invest- privatization.
ment of $2.1 billion.
Overall Transport Performance
It is clear that the Bank’s expertise is valued by its
clients in a variety of PPP ventures, including
greenfield construction projects. To ensure that
Bank clients understand the importance of en-
suring that environmental, safety, and social con-
siderations are properly covered in such projects,
constant dialogue needs to be maintained, in-
cluding presentations, workshops, and field visits
43
A DECADE OF ACTION IN TRANSPORT
for local staff to see successful projects elsewhere.
The Bank facilitated a useful debate, for exam-
ple, on the pros and cons of different approaches
to PPP projects in China and India.
Overall, about a third of Bank transport projects
have significant privatization or commercialization
objectives, and three-quarters of the outcomes
are in positive territory. IFC, in contrast, as the pri-
vate sector wing of the Bank Group, focuses en-
tirely on private sector investments. Among a
44
sample of 22 IFC projects evaluated, 19 achieved
high development outcomes and 15 had high
investment outcomes. These results compare fa-
vorably with other projects across IFC. Transport
investments represent an increasing proportion
of IFC’s portfolio, split approximately 90 per-
cent as loans and 10 percent as equity. Additional
funds raised in the form of B-loans6 from other
lenders also showed a higher mobilization rate
relative to other sectors (see appendix D for
more detail).
 Chapter 5: Evaluation Highlights

• Management and accountability are improving in countries where

road funds, agencies, and boards are functioning properly.
• Performance-based road contracting has been successful in
countries with a mature contracting industry and supporting legal
framework.
• The Bank has generally supported the provision of maintenance
through user charges.
• The Bank needs to help clients achieve a new level of governance
and institutional capacity, but this will require a stronger cross-
sectoral approach.
• Bank-supported road projects have a satisfactory record on envi-
ronmental compliance but need to encourage energy savings and
clean air more actively.
 5
Road Maintenance,
Institutional Development,
and Environmental
Protection

G
iven that the transport sector accounts for 15 percent to 20 percent of
Bank lending and the huge sunk investments1 in transport infrastruc-
ture in client countries, the continuing sustainability of these networks
is highly important. The cost of maintaining and renewing road infrastructure
is a burden for many governments, but this amount is dwarfed by the magni-
tude of related transport expenditure by private individuals and firms.

Maintaining the Assets take the “soft” option of deferring maintenance

When the quality of road infrastructure is poor,
the public pays heavily through significantly higher
vehicle-operating and personal time costs and, in
the worst cases, through a lack of accessibility
for at least part of the year during the rainy sea-
sons. Because roads account for a very substan-
tial share of the Bank’s transport portfolio, the
sustainability of such infrastructure has long been
a concern.
The importance of maintenance is not confined
just to roads but applies also to the provision of
transport services. Sustainable Transport (World
Bank 1996) emphasized that ensuring the long-
term sustainability of transport requires that all as-
sets be maintained adequately. In the management
of public infrastructure, this is frequently ham-
pered by inadequate budgeting and follow-up for
maintenance, accentuated when governments
during a debt crisis (Heggie and Vickers 1998). In
the supply of transport services, regulated prices
can be set at levels that are too low to provide for
the adequate maintenance of equipment. Never-
theless, where the Bank Group has been involved
in concessioning, once any backlog of mainte-
nance has been attended to and a financial model
put in place, few further maintenance problems
have been reported. The greatest challenge still
remains with roads, most of which fall within the
public sector domain.
Road maintenance activities worldwide are nor-
mally financed through one of two approaches:
through the budget or by means of a road fund.
Budget allocations to the road sector result from
a political process that assigns priorities to alter-
native uses. It can also form part of a multiyear ex-
penditure framework.2 Road funds, in contrast, are

47
A DECADE OF ACTION IN TRANSPORT
outside the budget and based on the principle that
road users should pay for the cost of the roads and
that revenues generated should be applied to
cover such costs. A key reason for setting up a road
fund is that road maintenance is not a politically
attractive use of government revenues, even
though road maintenance yields the highest eco-
nomic return.3
The Bank’s Approach
In practice, the Bank has supported channeling
revenues from road user charges to finance road
maintenance expenditures in many countries.
Such road funds, commonly known as “second-
generation” funds,4 commenced in 1993 with the
Zambian Road Fund. A more detailed account
can be found in appendix B.
Over the years there has been vigorous debate
about the merits and demerits of such funds.
Some macroeconomists, including in the Inter-
national Monetary Fund (IMF), take the view that
extrabudgetary funds fragment the budgetary
process and create unnecessary risks in the allo-
cation of resources. Eventually the Bank and the
IMF agreed on a formal coordination procedure
regarding the establishment
Second-generation road of such funds.5 The Bank has
funds have improved been pragmatic and tends to
promote road funds when
road management and the budget approach has
accountability. failed.
The road fund approach, when broadened to in-
clude the principles embodied in the 1995 Heggie
Report (World Bank 1995), can better be described
as a commercial approach. The perceived road
maintenance crisis, with its impact on the cost of
infrastructure and the operation of transport ser-
vices, required bringing roads into the market-
place, putting them on a fee-for-service basis,
establishing a surrogate market discipline, and
managing them like a business. Coupled with the
creation of a road fund, there has usually been a
semi-autonomous executive
Road funds road agency to manage the
are promoted when primary network, along with
a public-private board to run
the budget approach it. The board’s extensive mon-
has failed. itoring and auditing oversight
48
has generally helped significantly to ensure that
user charges to support maintenance are duly col-
lected and devoted to the intended purpose. Local
contractors have benefited from long-standing
efforts to support their development and now
handle most of the maintenance work. In Tanza-
nia, the road board also helps address the previ-
ously neglected problem of weak capacities of
district and urban councils to manage mainte-
nance of the extensive networks for which they are
formally responsible.
Project-Level Results
In a few countries where second-generation funds
have been introduced and where information is
available, there has been evidence of a signifi-
cant increase in the percentage of roads in good
condition. For example, in Benin, the increase has
been 9.4 percent per year since the creation of the
road fund. In Guatemala, the percentage of roads
in poor condition dropped from 40 percent in
1994 to lower than 20 percent in 2001.
However, country progress varies widely. As re-
cently reported from an SSATP study (Benmaamar
2006), the existence of a road fund does not mean
that it is either fully efficient or fully autonomous.
There are currently 27 road funds in SSATP mem-
ber countries, and in only one-third of the cases
are such funds regularly meeting routine expen-
diture needs.
The IEG review used three different sources to as-
sess the performance of road funds: existing eval-
uations; IEG’s database, including findings in
individual project assessment reports; and a sur-
vey of Bank staff responsible for road projects in
countries with road funds. Information from each
of these sources is limited, and none individually
permits the derivation of conclusive results.
Historically, projects have assessed performance by
comparing road fund objectives to achievements
or changes between the start of the road fund
and the situation a few years later. No evaluation,
however, compares a road fund with a control
case where the budget finances road maintenance
expenses. Studies reviewed included Balcerac de
Richecour and Heggie for ten African countries
(1995), Gwilliam and Kumar for seven African
 R O A D M A I N T E N A N C E , I N S T I T U T I O N A L D E V E L O P M E N T, A N D E N V I R O N M E N T A L P R O T E C T I O N
countries (2003), Zietlow for six Latin American
countries (2004), and an internal report for two
African and two Asian countries in 2005.
The outcome of Transport Sector Board project
objectives concerning maintenance remains dis-
appointing, with only 25 of 47 objectives (53 per-
cent) rated as moderately satisfactory or better.
However, there is a 5 percent improvement dur-
ing the period fiscal 2001–06 over fiscal 1995–2000.
Often the overall project is rated higher because
the better outcomes of the other development ob-
jectives mask the shortcomings in maintenance.
The real concern is with the sustainability of these
projects. In the Africa Region in particular, sus-
tainability is rated as likely in less than 62 percent
of cases. In several projects caveats are attached
to the assessment, to the effect that the project
will be sustainable only if sufficient funds are al-
located for maintenance in the future.
Although the introduction of road funds in some
countries may have improved the likelihood of
sustainability, there are other countries where
this will not happen because of economic or po-
litical instability. This risk is sometimes mentioned
in ICRs (for example in Niger, Sierra Leone, and
Togo), but often it is impossible to predict when
and where future civil disturbances will occur.
This means that the sustainability information is
almost certainly not as robust as it first appears.
Another clue to this overreporting is found in
the appraisal reports of active follow-on projects,
where system sustainability tends to be less en-
thusiastically portrayed than in the ICRs of com-
pleted projects. Individual conversations between
Bank engineers and IEG staff also elicited a
gloomier prognosis of sustainability. With the
benefit of hindsight and judging from PPAR as-
sessments, it is evident that between 4 percent and
5 percent of projects rated “likely” at the time of
completion would now be rated “unlikely”; the dif-
ficulty is predicting which ones will fail.
A European Commission evaluation observed
that ensuring adequate maintenance of the road
networks in developing countries is still work
in progress because most road funds do not
yet collect sufficient rev- Projects with objectives
enues, and insufficient
related to maintenance
capacity in domestic con-
struction industries is a have been less successful
continuing problem. Per- than expected because
formance contracting, how- many road funds have
ever, as indicated in the
previous chapter, is an un-
insufficient income.
ambiguous success story.
Experience with Financing Maintenance
Key lessons from IEG’s study of road funds are that
this approach will only be successful if there is gov-
ernment commitment to off-budget financing of
maintenance and to commercially oriented re-
forms of road management. A road fund should
not be contemplated if there is a high level of cor-
ruption and little likelihood of having indepen-
dent audits and transparent procurement. The
financing of road maintenance should be viewed
in the broader context of road management,
which means that monitoring and evaluation
should start with credible assessments of road con-
dition, past trends in the allocation for road main-
tenance, and the efficiency of road maintenance
operations. Private sector participation on road
boards has also proved to be an effective way to
improve transparency and accountability in the use
of road maintenance funds.
The European Conference Developing countries
of Ministers of Transport
have the most to gain
discussed additional les-
sons, such as the role of the from the use of road
process in ensuring stabil- funds.
ity and security of the fund-
ing flow, and noted the improved effectiveness
of funds disbursed as a consequence of the pos-
sibility of multiannual budgeting arrangements.
However, European Conference of Ministers of
Transport countries for the most part have well-
managed budgetary processes, better-maintained
infrastructure, and a well-established private sec-
tor contracting capability. Their needs are more
related to the establishment of business-oriented
road agencies. Developing countries have the
most to gain from the road fund approach, es-
pecially those that have a history of chronic un-
derfunding of asset maintenance.
49
A DECADE OF ACTION IN TRANSPORT
Box 5.1: Performance-Based Contracting of Road Maintenance in Argentina
Following promising pilot efforts in performance-based contract-
ing of maintenance, in 1995 the Argentine Direccion Nacional de
Vialidad negotiated 11 3-year contracts for routine maintenance
of 3,600 km of paved roads. Building on this experience, it then de-
veloped the Contratos de Recuperación y Mantenimiento (CREMA),
assigning responsibility for rehabilitation on stretches where it
was needed, followed by maintenance of the section for 5 years.
Sixty such contracts, covering 11,000 km of roads, were compet-
itively awarded in 1996–97. Detailed engineering of the rehabilita-
tion work was to be done by the contractors, and, apart from initial
start-up payments, they were to be paid based on the state of the
roads under their charge. That would be verified by monthly visual
inspections.
These contracts were mostly completed by the end of 2002.
The share of the roads in poor condition had been reduced from
41 percent to 6 percent; the higher standards of maintenance had
also reduced the rate of road surface deterioration. Costs had
been kept very close to budget and were some 12 percent to 18
percent lower than for comparable works using traditional con-
tracting. The ERR on the program was about 60 percent because
of the significant effect of the improvements on vehicle operat-
ing costs. Coverage of the program was recently extended through
a second phase to a further 8,200 km of national roads; the same
approach is now being applied by some of the provinces with Bank
support.
Experience to date highlights several lessons:
Sources: World Bank (2005b), Zeitlow (2004), discussions with Bank staff.
There is merit in The approach to road
maintenance continues to
supporting more
evolve. Originally, many
government-donor road authorities used in-
assessments of road house force account units
network needs. to perform maintenance
work. This was a very ex-
pensive way of carrying
out this activity, because the real costs were hid-
den in the departments’ often complex account-
ing and reporting structures. Over time this began
to give way to more efficient method-based con-
tracting, whereby a bid system was used to select
contractors through tenders for specified work.
50
• Although the system can only yield the desired results if the
flow of funds is sufficient to make timely payment to the con-
tractors, adoption of the system—which implies commit-
ments to a wide range of contractors—helps to ensure that
funds flow and avoids their diversion to uses of lower eco-
nomic priority.
• CREMA’s effectiveness depends on the availability of con-
tractors and road agencies experienced in contract manage-
ment and road maintenance; it also depends on the existence
of adequate management information systems covering road
condition, maintenance needs, and costs.
• It is important to avoid trying to place risks on contractors in
excess of their capacities.
• Major rehabilitations are likely to require detailed engineering
in advance and contracting on more traditional lines, but in-
corporation of more standard rehabilitations within longer-
term maintenance contracts has advantages: stimulating
contractor innovation and ensuring more efficient distribution
of expenditure on a road over time.
• Moving CREMA-type contracts toward design, build, finance,
and operate operations, with the private sector providing a
higher share of the investment required by the road network,
depends principally on development of the local capital mar-
ket. Initial hopes in Argentina along these lines proved unre-
alizable because of borrowing uncertainties and high interest
rates, which led to unacceptably high bids.
The system also helped to develop local con-
tracting industries.
In the past decade, however, several countries
have moved beyond this level to performance-
based contracting, which involves explicitly linking
payments for the management and maintenance
of road assets to certain clearly defined minimum
performance indicators. This has proved suc-
cessful in some transition countries, such as Es-
tonia, and in middle-income countries, such as
Argentina (box 5.1), Brazil, South Africa, and
Uruguay. It may be, however, inappropriate for
countries at an earlier stage of development,
 R O A D M A I N T E N A N C E , I N S T I T U T I O N A L D E V E L O P M E N T, A N D E N V I R O N M E N T A L P R O T E C T I O N
where government capacity and the contracting
industry are relatively weak and the supporting
legal framework is less well defined.
Over the years the Bank’s approach has become
more flexible regarding the standards and tech-
nology necessary to achieve road condition sus-
tainability in differing circumstances. In some
countries with hilly terrain, the rate of gravel loss
can be dramatic and low-cost paved roads have
worked. In others there has been more focus on
turning seasonal roads into all-weather roads by
concentrating on bridges and drainage. Without
maintenance, gravel roads can deteriorate in 2–3
years in some climates. The Bank has usually re-
sisted financing routine maintenance costs.
However, there are examples of upgrading proj-
ects linked to a covenant that the government
must set aside funds for routine maintenance for
an agreed time period (Lesotho). In one sense,
the Bank indirectly finances at least some routine
maintenance whenever it agrees to fund the re-
habilitation of a road earlier than would have
been the case had the road been properly main-
tained. IEG believes there may also be some merit
in pursuing a greater number of coordinated ini-
tiatives with other financial institutions with joint
government-donor assessments of network needs,
including maintenance (appendix B).
An indirect effect of poor capacity experienced in
several countries, especially in Africa, is exces-
sive road damage caused by overloaded vehicles.
The knowledge exists to control truck overload-
ing; the main impediment to enforcement of axle
load regulations is usually the limited capacity of
the traffic police. Because the damage caused by
overloading rises exponentially with each addi-
tional ton of overload, the damage to the roads
can be enormous. Consequently, this is an area
where further investigation by sector staff could
easily be justified.
Two options are possible—either stronger pave-
ments, where enforcement is unlikely to improve
in the short to medium term, or greater assistance
with the improvement of vehicle testing and over-
load control. However, this is oversimplified be-
cause there are numer- Vehicle overloading is a
ous other factors that also
particular problem on
need to be taken into
account, including regu- African roads in part due
lations, accuracy of weigh- to lack of enforcement.
ing equipment, avoidance
of corruption, and appropriate fines (Lauridsen and
others 1994). According to IEG’s analysis, success
in this area is limited in developing countries.
More attention needs to be paid in future strate-
gies—taking into account local administrative ca-
pability—to customizing an appropriate balance
between highway construction standards and
enforcement of overloading to minimize overall
total costs.
The Importance of Good Governance
The Bank views good governance, and therefore
anticorruption activities, as central to its poverty-
reduction mission. Consequently, it focuses on
ensuring organizational integrity, preventing cor-
ruption in Bank-funded projects, and helping
countries to improve their governance and con-
trol corruption. In February 2006, the leaders of
the major multilateral development banks reached
consensus on the broad policies and practices
necessary to address corruption.6
Corruption negatively impacts infrastructure proj-
ects (including transport) through higher costs,
but evidence based on contract awards can be
hard to find and even harder to prove. Major
differences between ex-
pected and actual costs,
Evidence of corruption in
for example, were the infrastructure projects
foundation of a 1998 re- can be hard to find and
port on the status of cor-
harder to prove.
ruption in Tanzania that
resulted in the subsequent arrests of those im-
plicated. Although the case was in the High Court
for more than 3 years, the alleged corruption was
impossible to prove because cost increases can be
attributed to so many different factors.
Completion reports in the transport sector some-
times refer only obliquely to potential malprac-
tice, because there is always the possibility that
the client has failed to understand Bank proce-
dures. In the rehabilitation and upgrading of Aden
51
A DECADE OF ACTION IN TRANSPORT
Airport, for instance, there was a delay of more than
a year because the Bank insisted that the contract
be awarded to the lowest technically sound ten-
der, whereas the tender board wished to make a
different choice from among the remaining bid-
ders. A similar experience was recorded for urban
roads in Burkina Faso.
However, other cases are more straightforward.
In the Northern Uganda Reconstruction Project
regular Bank supervision uncovered irregulari-
ties that led to further audits and ultimately to a
request for a government investigation. Eventu-
ally a project manager was indicted by the Ugan-
dan judicial system. The ICR for a Kenyan urban
transport project describes how suspicion of cor-
ruption7 led to a forensic audit that found signif-
icant control weaknesses in the project as well as
multiple indicators of fraud and corruption. This
led to the suspension of the project and the dis-
missal of the Bank task team leader.
Anticorruption The stronger focus on the
models must be need to root out corruption
has, according to IEG stake-
customized. holder feedback, heightened
understanding by Bank staff and borrowers as to
what constitutes corruption. This greater aware-
ness has led to ideas of how corrupt practices
can be identified. In October 2005 the Transport
Anchor sponsored a workshop that included in-
creasing the participants’ knowledge of improv-
ing governance in PPP highway concessions. It
also organized an infrastructure governance round-
table in March 2006; during this event a number
of countries shared their experiences in identify-
ing governance issues and in building institutions
and processes for good gov-
The Bank needs to help ernance. The WBI has also
its clients achieve a new been active in sensitizing
level of governance and senior government staff to
governance issues.
institutional capacity,
but this requires a Regions are now taking prac-
multisector approach tical steps to combat cor-
ruption. The Europe and
and an evaluative Central Asia Region has de-
framework. veloped some diagnostic an-
52
ticorruption tools, while the Trade and Transport
Facilitation Program in southeast Europe intro-
duced measures and equipment to reduce smug-
gling and corruption at border crossings. The
East Asia and Pacific transport team recently de-
veloped an anticorruption framework based on
its experience in the Indonesian road sector; the
framework was presented to and discussed by
the Transport Sector Board.
Corruption issues are often unique to individual
countries, and although sharing experiences
among countries and Regions will be useful, a
single model will not suffice. Building ownership
within countries and gaining high-level political
commitment could be the way to achieve more
success, but at this stage no evaluative evidence
in support of this strategy is available. Neverthe-
less, new initiatives have commenced in Cambo-
dia, the Philippines, and Vietnam.
Good governance is not just about reducing cor-
ruption; it is the whole process by which gov-
ernments are held accountable. It also covers the
capacity of governments to manage their re-
sources efficiently, including the ability to for-
mulate, implement, and enforce sound policies
and regulations. Steps to improve governance
may be pursued in many different ways, such as
through the accountability of professional insti-
tutions; the introduction of market-related salaries;
and greater transparency, including budgetary
disclosure, open meetings, and freedom of the
media. Similarly, the introduction of improved fi-
nancial management and procurement systems
should assist. At this stage, however, there is no
framework for evaluating the relative merit of
these measures, which are still largely works in
progress.
An IMF paper (Kaufmann 2005) argues that it is
sometimes possible to quickly and significantly
improve a state of governance, citing Bosnia,
Ghana, and Sierra Leone as examples. However,
governance shortcomings in some countries are
entrenched, and it would be naïve to think that
governance will not continue to be a problem. Con-
tinued vigilance will be essential.
 R O A D M A I N T E N A N C E , I N S T I T U T I O N A L D E V E L O P M E N T, A N D E N V I R O N M E N T A L P R O T E C T I O N
Building Capacity
A previous IEG evaluation of capacity building
(IEG 2005a) observed that the international de-
velopment community, including the Bank, has
traditionally treated public sector capacity build-
ing as a collateral objective—as a byproduct or in-
strumental measure to advance near-term project
outcomes—rather than as a goal in its own right.
As a result, capacity building is not a well-defined
area of development practice that has an estab-
lished body of knowledge about what works in
meeting different needs under different country
and sector conditions. However, it should at least
encompass the three elements of institutional
development, regulatory reform, and training.
In the transport sector, technical assistance has fre-
quently been used merely to fill skills gaps to
manage Bank-funded projects, sometimes with
limited lasting impact on strengthening client ca-
pacity (Bangladesh, Dominica, and Lesotho—see
box 6.4). In general, technical assistance has been
most effective when used for discrete and well-
defined tasks and in the context of a compre-
hensive strategy (Ethiopia, Ghana, and Nicaragua).
Some projects reviewed supported only general
training of individuals. While such projects have
frequently achieved set targets, as in Albania and
China, there has been little subsequent assess-
ment of the effectiveness of this training or de-
termination of whether the organization retained
the staff concerned. Evidence from other project
assessments after intervention (Russian Federation
and the Republic of Yemen) suggests there may
be a high turnover of such staff. A further down-
side is that there is seldom synchronization be-
tween the timing of the training intervention and
the necessary organizational changes needed to
improve public sector performance.
Some positive results, however, are also evident,
such as the establishment of 25 provincial road in-
stitutes in Peru. Results for urban transport de-
velopment projects with institutional objectives
have also generally been more successful and
often sustainable, as in the decentralization re-
forms in Brazil. In Lao PDR a proliferation of
fragmented project implementation units was
dismantled, and responsibility for implementation
shifted to the government, thus ensuring that ca-
pacity was strengthened in the appropriate line
ministry. Other measures were added to ensure
that a devolution of responsibilities was then ex-
tended to the provincial departments. IEG rated
the outcome of this project as highly satisfactory.
Supporting Institutional Development
Of 251 closed Transport Sector Board projects
with institutional objectives, 62 percent had a
moderately satisfactory or better outcome. The
transport sector, with its strong engineering cadre,
is particularly good at resolving technical issues
and introducing management systems. But insti-
tutional objectives cover a broad spectrum, rang-
ing from organizational and regulatory reform to
training and technical studies. For the sector as a
whole, institutional development outcome re-
sults varied by topic (see
table 5.1). Technical is- The Bank’s support to
sues were satisfactory in institutional development
85 percent of cases; plan-
has had mixed success.
ning objectives achieved
a success rate of 78 percent. Other scores were:
studies/safety, 68 percent; management capacity
building, 61 percent; environmental matters, 64
percent; organizational restructuring and regu-
latory change, 63 percent; training, 52 percent; and
monitoring and evaluation, an unsatisfactory 38
percent.
A problem reported in several projects, including
Cape Verde, Indonesia, Lesotho, the Russian Fed-
eration, and Turkmenistan, was lack of realism on
both sides about the rate at which change could
be accomplished. It was often much slower than
envisaged at appraisal, sometimes leading to sev-
eral extensions before projects could be closed.
Areas where the transport sector could improve
its performance in institutional development are
as follows: First, make a more rigorous assess-
ment of the institutions’
existing capability and Institutional change takes
willingness to change;
second, ensure that the time, and the Bank needs
regulatory framework can to be realistic about this.
53
A DECADE OF ACTION IN TRANSPORT

Table 5.1: Analysis of Performance by Institutional Development Objectives,

Transport Sector Board Projects, Fiscal 1995–2006

Objectives rated moderately

No. of satisfactory or better
objectives
Subobjective rated by IEG Number Percent
Management capacity building 64 39 61
Environmental management 22 14 64
Monitoring and evaluation 8 3 38
Maintenance 47 25 53
Training 21 11 52
Planning 18 14 78
Technical issues 20 17 85
Studies and safety 19 13 68
Restructuring, decentralization, and regulation 32 20 63
All institutional development 251 156 62
Source: World Bank data.

support the changes proposed; and third, look for
opportunities to make such interventions sus-
tainable beyond the horizon of the immediate
project through a more programmatic approach.
Continuity of engagement is also important.
In some instances (such as Indian Railways or
Tanzanian roads) the Bank has withdrawn when
faced with little or no apparent progress with re-
form issues. But in time new factors have come
into play and the situation has changed. The Bank
can only hope to influence a new direction if it
stays involved.
Protecting the Environment
An IEG evaluation of environmental sustainabil-
ity in development noted that many developing
countries view international concern over envi-
ronmental problems in their countries as intrusive
and likely to impede development. They argue
that developed countries have overexploited the
environment, refused to take full responsibility for
mitigation of their own impacts, and want to shift
that responsibility to developing countries with-
out adequate compensation. This perception has
substantial validity and has complicated the role
of the Bank. At the same time, public tolerance for
inadequate compliance by the Bank of its own
policies is low. The transport sector has had
heightened awareness of environmental issues
since the well-publicized Brazilian Polonoroeste
program in the 1980s, when upgrading the BR-364
highway led to an explosion of uncontrolled de-
forestation speculation in the absence of effective
environmental controls.
During the review period the transport sector has
performed reasonably well in most projects with
environmental objectives. But while the sector
received a 94 percent score from QAG on Quality
at Entry for the quality of environmental man-
agement planning and for assessment of en-
vironmental risks (based on 53 projects), the IEG
outcome results for environmental objectives are
less positive. Fourteen of 22 closed Transport Sec-
tor Board projects with environmental objectives
(64 percent) returned a moderately satisfactory or
better outcome. Several were involved with es-
tablishing a local environmental capability, in-
cluding setting up environmental units and training
in diverse areas such as environmental protec-
tion activities and handling resettlement and com-
pensation issues. Special attention in some projects
was on reducing negative environmental impacts
such as noise and air pollution (box 5.2).
The majority of transport projects with environ-
mental objectives in the past decade have been

54
 R O A D M A I N T E N A N C E , I N S T I T U T I O N A L D E V E L O P M E N T, A N D E N V I R O N M E N T A L P R O T E C T I O N

Box 5.2: Lessons on Reducing Urban Pollution

Issues such as air pollution have gained importance in recent
years. In Dhaka, highly polluting three-wheeled taxis with two-stroke
engines were removed under the Bank’s Air Quality Management
Project. This made a significant difference to air pollution. How-
ever, the recommended social measures to alleviate the adverse
impacts on the livelihood of affected drivers were disregarded.
Special measures to cope with two-wheeled traffic are also
needed in many South Asian countries such as Thailand and Viet-
nam. An important Bank publication on the air pollution issue, Re-
ducing Air Pollution from Urban Transport (World Bank 2004a),
provides a practical framework of guidelines and principles on how
to select appropriate policies and take mitigation measures against
the worsening poor urban air quality. WHO has estimated that
650,000 people died prematurely from urban air pollution in devel-
oping countries in 2000. But Bank involvement is still small and ar-
guably should be greater, especially in Asian cities.
The adverse effects of air pollution often fall disproportionately
on the poor, compounding other environmental problems such as
lack of clean water and sanitation. Energy savings are also under
the spotlight; in Brazil more than a third of the country’s cars run
on either pure ethanol or gasoline-ethanol blends. Natural gas to
power public transportation is becoming more common, and many
cities have programs to eliminate leaded gasoline.

Source: World Bank (2004a).

classified as category B or C. Category A projects vironmental supervision) Transport projects with

are likely to have significant adverse impacts that
are sensitive, diverse, or unprecedented. Cate-
gory B projects can have potentially adverse en-
vironmental impacts on human populations or
environmentally important areas—including wet-
lands, forests, grasslands, and other natural habi-
tats. Category C projects are likely to have minimal
or no adverse environmental impacts.
An example of recent progress is the Chinese Fu-
jian Provincial Highway. In this project a full envi-
ronmental assessment was carried out and the
environmental management plan covenanted in
the loan agreement. The provincial road author-
ity established a new environmental unit and
worked closely with Bank staff, whose supervision
team (including two environmental specialists)
was also diligent in following up on the imple-
mentation of the environmental mitigation ac-
tions. The monitoring program and outcome were
comparable with industrial country standards.
But there is room for improvement in this area. The
environmental impacts of infrastructure projects
have long-term implications (often 50–100 years),
while national plans usually look forward 20 years
or so, and project appraisals typically have a 5- to
15-year horizon. A concern is that once projects
are completed, Bank supervision (including en-
ceases. Resources available
environmental objectives
for fully incorporating en-
vironmental concerns into have performed
project design and evalua- reasonably well.
tion are constrained.
There is a need to look “beyond the fence” to what
the IFC characterizes as the area of impact. In
transport this would be the longer-term impacts
on expanded land use; the deforestation of rural
areas; and impacts, especially in the cities, of in-
creasing motorization such as traffic congestion
causing increased air pollution, noise, and traffic
accidents. IFC is able to go
further than IDA and IBRD Increasing motorization,
with its environmental sur- traffic congestion, and
veillance, continuing its expanding land use will
oversight until the loan is
fully paid off or the equity continue to require
is sold. concerted attention.
Only six Bank projects related to the urban en-
vironment and air quality in 10 years have been
completed and evaluated. One of these was the
Transport Air Quality Management Project for the
Mexico City metropolitan area. The project, which
had a satisfactory outcome and was assessed by IEG
in a PPAR, led to a significant decrease in ambient
concentrations of pollutants and resulted in fewer

55
A DECADE OF ACTION IN TRANSPORT
respiratory illnesses and other acute syndromes of
poor quality air. More of these projects are needed.
More projects to Urban planning programs that
integrate public transport, land
encourage energy
use, and air quality strategies
savings and clean air have been promoted for many
are needed. years. Curitiba, Brazil, and Bo-
gota, Colombia, where people’s
mobility has been supported through use of pri-
vate vehicles, have long been recognized as in-
structive models for urban planners, but such
achievements resulted from exceptionally strong
leadership. The Bank has shown that extending
and modernizing commuter rail systems and bus
corridors is an effective way to alleviate heavy
urban traffic congestion (Brazil). Attention is also
increasingly being given to the installation of cen-
tralized traffic management systems (Bangladesh
and Vietnam) to regulate traffic flows as efficiently
as possible. Parking strategies can also improve
traffic flow, generate revenue, and discourage car
usage. In a few cities special arrangements have
been made for nonmotorized transport (in Bangla-
desh and the Philippines).
56
Whether and how transport can influence be-
havioral change in established industries and by
consumers to meaningfully address climate
change trends remains an open question. Given
the expected growth in the vehicle population, the
demand for road space by private vehicles will in-
evitably have to be constrained through pricing
mechanisms and physical restrictions.
Several solutions are already technically possi-
ble, but the extent to which measures that con-
strain vehicular use will be supported politically
is uncertain, given their likely unpopularity with
the public. Europe appears to be moving in the
right direction. This is a long-term problem to
which the Bank will need to devote more serious
attention and even advocacy. Currently, there
tends to be more focus on safeguard issues up
front in project design; that avoids doing imme-
diate and visible harm but is arguably weaker on
addressing longer-term policy and incentives to
bring about substantial impacts. Issues such as this
will need to be vigorously addressed in a syner-
gistic way by the newly integrated Infrastructure
and ESSD Network.
 Chapter 6: Evaluation Highlights

• Both urban and rural poverty can be reduced when transport

improves accessibility and affordability for the poor.
• The distributional impact of transport projects is underresearched.
• Regardless of who implements the project (communities or works
departments), sustainability remains a major issue.
• Pro-poor passenger transport pricing needs more attention for
accessible transport to reach the poorest.
• In fragile states the risks of intervention are high, but the returns can
sometimes be substantial.
• Where there is low institutional capacity, Bank staff tend to under-
estimate the time needed to implement reforms, build capacity, and
build institutions.
 6
Transport and Poverty

T
his review began by showing the importance of transport in achieving
poverty reduction and its potential contribution to the MDGs. Trans-
port effects on poverty reduction are largely indirect and not easily quan-
tified. The connection between transport and poverty reduction is that when
transport improves accessibility for the poor, it unlocks employment oppor-
tunities in construction and other areas, and more importantly enables essential
trips to service centers, health and educational facilities, and markets.

In this chapter the experiences and lessons em-
anating from transport projects designed to re-
duce poverty are discussed, first in the rural
context and then in the cities, where accessibil-
ity and affordability are also crucial issues. Finally,
Africa is given special attention, because the Bank’s
poverty-reduction agenda in recent years has put
a spotlight on this continent. Africa has a greater
share of fragile states than any other Region, not
only because of its demographics and geogra-
phy, but also because of weak governance and po-
litical instability.
Rural Transport and Poverty
The causes of rural poverty are complex and mul-
tidimensional. They include issues regarding cul-
ture, gender, climate, markets, and public policy.
Rural poverty accounts for nearly 63 percent of
poverty worldwide, reaching 90 percent in some
countries, such as Bangladesh, and between 65
and 90 percent in Sub-Saharan Africa (Khan 2001).
The ways in which policies affect the rural poor
are through markets, transfers (both public and
private), and both services and infrastructure.
Transport falls in the latter category; roads are nor-
mally provided through public funding and the ve-
hicles by both the public and private sectors.
Nonmotorized transport in a wide variety of forms
plays an important role in many countries.
Although some of the Bank’s Most rural road
main intercity highway projects
projects focus on
(especially in China) also in-
clude district and even local access, and many use
road components, most rural labor-intensive
road projects involve basic ac- construction.
cess roads, many using labor-
intensive construction. A labor-intensive approach
is popular with donors because it generates em-
ployment, but it also requires good technical as-
sistance support and strong client commitment,
which is sometimes lacking. But such roads are
in high demand by the rural population and, in

59
A DECADE OF ACTION IN TRANSPORT
Box 6.1: Improving Road Access in Rural Lesotho and Ghana
The Lesotho Road Rehabilitation and Maintenance Project (ap-
proved in 1996) assisted with the rehabilitation of 414 km of rural
access roads. An impact study found that the rural residents con-
sidered better access to be of great value, a finding that was con-
firmed by an IEG mission. Employment during construction was also
important, and most participants were able to work on these roads
for an average of 3 months.
Although the baseline data were sketchy, it is clear that the up-
graded roads led to a range of small businesses being estab-
lished. The affected communities also mentioned the improved
access to economic and social services. These positive impacts
are consonant with both the Lesotho PRSP and the Lesotho Vision
Source: World Bank (2006b).
Lesotho, for example, have recorded positive im-
pacts (box 6.1).
Typically, some of these roads are constructed
under the district works department and in the
Bank fall under the Transport Sector Board, while
others are part of community-driven or social fund
projects. In the latter case they may be a compo-
nent of a package of infrastructure improvements
ranging from water and sanitation to new com-
munity centers. Community projects within the
Bank fall under sector boards other than transport.
The works-managed projects, where appropriate
technical staff were used, were generally more
successful than the community projects, with 26
of 36 (72 percent) rated satisfactory. The main
reasons given for the less satisfactory perfor-
mance in the other 28 percent of cases were in-
sufficient finance, poor technical skills and capacity,
and insufficient priority given by government.
In Indonesia it was also demonstrated that large
structures built using labor-intensive methods
could cost about one-third
Projects have generally less than equivalent works
performed better when constructed through gov-
construction is managed ernment agencies. In the
Philippines it was proven
by the district works that small infrastructure
department. works such as foot trails,
60
2020 Plan. A more rigorous follow-on pilot project has recently been
completed in the Senqu River Valley, where village mobility maps
have been created (Lesotho Ministry of Public Works and Trans-
port and World Bank 2005). This will give important information about
the impact on poverty and gender.
A similar study in Ghana analyzed travel patterns of villagers
by mode. It showed that the majority of trips were by nonmotor-
ized means, including on foot, but that motorized trips were more
likely to be made for trips to markets or health centers. Gender is
important in these analyses because rural access improvements
may be particularly beneficial to women and children.
spillways, and hanging bridges could benefit large
numbers of people (37,000 households in this
case). Improvements of farm-to-market roads in
India (Assam) showed that cropping intensity im-
proved by as much as 45 percent, which led to a
substantial increase in employment. Another study
in India indicated that expenditure on roads had
by far the largest impact in reducing rural poverty.
For every $22,000 invested in rural roads, 163 peo-
ple were lifted out of poverty (Fan, Hazell, and Tho-
rat 2000).
Although the contribution of transport opera-
tions to poverty reduction is generally indirect,
most direct poverty-targeted interventions such
as schools, clinics, nutrition programs, and even
credit extension depend on transport in one
way or another. The distributional impacts of
transport projects and their effects on poverty
are relatively underresearched and are often
anecdotal rather than results-based, but there is
evidence that village road improvements signifi-
cantly affect school enrollment and attendance.
According to studies by WHO, between 40 percent
and 60 percent of people living in developing
countries live more than 8 km from health care
facilities; in rural areas this distance can be even
greater, and this is especially problematic in the
case of accessing maternal and child care (WHO
2005).

Recent work in Bangladesh using household-level
panel data confirms the importance of rural ac-
cess and suggests that road investments are pro-
poor, meaning the gains are proportionately
higher for the poor than the nonpoor (World
Bank 2006c). Bank research in Morocco showed
that investments in new roads had gender impli-
cations; safer roads encouraged parents to send
their daughters to school, thus increasing female
primary school enrolment. In Bhutan the travel
time involved in getting to and from school was
substantially reduced, and in one village school at-
tendance increased eightfold.
Bank community-based projects often involve
much deeper engagement with the local people,
but the difficulty in assessing the effectiveness of
such projects is that they frequently fall under sec-
tor boards other than transport. The evaluation
rating (59 percent moderately satisfactory or bet-
ter) reflects the entire project in which the trans-
port component may be a fairly small part. Typical
reasons for failure are, however, very similar to
works-managed projects because sustainability
is less assured.
In Moldova the road component was poorly tar-
geted at reaching the poor, and in Lebanon con-
struction goals were not met because of difficulties
in getting landowner agreement and because of
issues related to maintenance responsibility. A
recent QAG assessment of the quality of transport
components under other sector boards confirmed
IEG’s findings that in multisector projects the
quality of preparation for technical and sustain-
ability issues is subsumed by community partici-
pation issues. QAG looked at the Quality at Entry
of 16 projects and found that only 25 percent
were satisfactory. As it is not cost effective to have
a transport team member on all such projects,
QAG’s proposal that the Transport Sector Board
draw up guidelines for handling future transport
components in multisector projects is a sensible
suggestion.
Sometimes a major leap forward in poverty re-
duction can be achieved by going beyond the
“grassroots” village project. The opening of sig-
nificant areas of rural potential may depend on a
TRANSPORT AND POVERTY
large-scale transport invest- The distributive
ment. In such cases a major
impact of transport
infrastructure project can
make a huge difference to projects is relatively
poverty reduction; the Ja- underresearched.
muna River Bridge in Ban-
gladesh is a fine example of a multifunctional
structure that led to improved income for a sig-
nificant number of people (box 6.2).
Urban Transport and Poverty
Much of the growth in the world’s population
for the foreseeable future will take place in the
cities and towns of the developing world. In 2000
the world’s urban population in developing coun-
try cities was 2.1 billion; it is expected to reach at
least 2.9 billion by 2015. Cities in developing
countries with a population exceeding 1 million
numbered 268 in 2000, but by 2015 the figure is
predicted to rise to 358 (World Bank 2001; UN
Habitat 2001).
Over the next 20 years, many countries will for the
first time become more urban than rural. In part
at least, urban poverty is created by the efforts of
the rural poor to escape the
poverty trap by moving to Community-based
the cities, where they per- projects often fall short
ceive that better opportu-
nities exist. Although the
on sustainability.
benefits that urbanization
brings cannot be overlooked, the speed and scale
of this transformation presents many challenges.
Urban transport projects cover construction or
rehabilitation of urban roads, bridges, and inter-
changes; improvements to traffic management
and systems; and (in a few cases) support to
suburban rail transport and renewal of bus and
trolley-bus fleets. Performance indicators have in-
cluded increased passenger
and fleet capacity, reduced Large-scale
travel and waiting times, and
investments that can
improved passenger com-
fort and safety. open significant areas
of rural potential can
Bank emphasis has often
have substantial
been on encouraging the
design of urban transport impacts on poverty
projects to improve the reduction.
61
A DECADE OF ACTION IN TRANSPORT
Box 6.2: Bangabhandu Jamuna River Bridge, Bangladesh—How Transport Infrastructure Can
Stimulate Development
This project aimed to establish an efficient and reliable multimodal
transport link across the Jamuna River to connect Bangladesh’s
less-developed northwestern region with its more developed east-
ern region. The intention was to accelerate economic growth in
the northwest and to integrate the area more fully into the econ-
omy of the nation.
The bridge, which is nearly 5 km long, carries a four-lane high-
way, rail line, utility connections, and fiber optic cables; it was
opened in June 1998. This structure, which cost $962 million,
was financed by the government of Bangladesh with the support
of several international financial institutions, including the World
Bank, the Asian Development Bank (ADB), and the Japan Bank of
International Cooperation. The rail component financed mainly by
ADB added value by including improvements to the rail system, such
as connecting two different rail gauges, constructing 99 km of
Sources: IEG (2000), ADB (2005), Luppino and others (2004).
Urban growth integration between services
and to increase the access of
predictions are
urban poor to employment
spectacular; the centers, health centers, and
concern is whether educational facilities (table 6.1).
A new contingent of policy
transport investments
makers is assuming the diverse
can keep up. responsibilities of urban gover-
nance—as many national gov-
ernments decentralize and devolve their functions;
and programs in poverty, health, education, and
public services are increasingly being placed in the
hands of hitherto untested municipal and re-
gional governments.
Many of the Latin American urban transport proj-
ects based on urban railway restructuring or pub-
lic transport reform have been de facto instruments
to catalyze broader institutional
The Bank’s emphasis reform, such as the creation of
in urban transport metropolitan authorities, modal
has often been on the coordination, resource genera-
integration of tion for the development of
activity poles, and the private
services to increase concessions of operations. In
access for the poor. some Brazilian cities improve-
62
new connecting track, and assisting with institutional reforms in
the Bangladesh Railway Company.
Before the bridge was constructed the only connection was a
slow-moving ferry; traffic jams at the ferry terminals often lasted
for several days. The completed project has reduced journey times
and transport operating costs and has stimulated interregional
trade. Computer simulations have predicted major shifts of persons
out of abject poverty locally with wider distributional improve-
ments to both local and national welfare.
IEG rated the project outcome as highly satisfactory. The phys-
ical works were completed without major implementation delays,
the quality of construction met international standards, and the en-
vironmental and resettlement plans were largely successfully ac-
complished. Even though the road was tolled, the level of traffic
has been 41 percent higher than expected.
ments in access to metro stations through intro-
ducing connecting minibus services lines with sub-
sidized fares have proved successful. However,
poor people often live too far away from these pub-
lic transport corridors to benefit from such proj-
ects. This is also an international problem because
the urban poor, whether in Moscow, Paris, or Jo-
hannesburg, tend to live on the city peripheries
where land is cheaper, but where travel distances
are longer, more costly, and less convenient.
Some of the early projects that included compo-
nents on bus deregulation and privatization proved
unsustainable (Sri Lanka), and in recent years the
Bank has resisted bus replacement, unless ac-
companied by significant regulatory reforms to
achieve longer-term sustainability (for example, in
Uzbekistan and Kyrgz Republic)—a strategy vali-
dated by project performance. Moreover, the Bank
has discouraged metro and light rail construction
worldwide (with a few exceptions) in favor of more
cost-effective solutions such as buses, bus priority
measures, and exclusive busways. It has, however,
supported improving the capacity (Korea) or con-
nectivity (Brazil) of existing metros. Competitive
contracting has also been actively encouraged.

Pro-poor fare pricing with targeted subsidies,
such as the vale transporte, has been successfully
promoted in Brazil, where it is an important so-
cial safety net (this subsidy is a compulsory re-
quirement for employers; through this they
finance part of the commuting costs of their em-
ployees). Without the vale transporte, millions of
formally employed users earning $300 per month
or less would have trouble paying their fares.
However, the vale transporte does miss the poor-
est people, and a future challenge is how to ex-
tend its benefits to the informal employment
sector. Decisions on appropriate fare structures
also have to be taken in the context of trading off
cheaper fares and poorer services; in the Kyrgyz
Republic it was demonstrated that the poor may
sometimes be willing to pay more for better ser-
vice. The Bank staff has solid guidance for deal-
ing with the various pricing techniques from Cities
on the Move (2002a) and other publications.
In a 2003 IEG evaluation summary of urban trans-
port1 30 Bank interventions in urban transport
over the preceding 20 years were reviewed; 87 per-
cent were found to have had satisfactory out-
comes. The reestimated average ERR was found
to be 30 percent, compared with 43 percent at ap-
praisal. These results are slightly higher than
those covered by the review period of this study
(1995–2005), whereby 30 of 40 (75 percent) had
a moderately satisfactory or better outcome.
However, inspection of the objectives shows that
later projects have had more institutional content.
In terms of upgrading physical infrastructure,
most projects achieved or even surpassed their
physical objectives, while traffic management pro-
grams were more successful in countries that
have the ability to enforce traffic regulations, such
as Brazil and Korea. Projects that tried to bring
about better integrated development, such as in
Belo Horionte and Recife, sometimes took longer
than expected to implement because of exoge-
nous factors (Brazil imposed severe fiscal con-
straints after 2002 following the macroeconomic
upheaval in Argentina). Sustainability was con-
sidered likely, however, in more than two-thirds
of all urban transport projects assessed.
TRANSPORT AND POVERTY
Although a few projects have The Bank has tended
tackled the issue of integrat-
to discourage light rail
ing nonmotorized traffic and
pedestrians in motorized and metros in favor of
cities, this can be a difficult more cost-effective bus
challenge because the in- transport.
cumbent professionals have
often been trained in Western countries or fol-
low developed country philosophies toward the
control of transport in developing cities. Some-
times a change in locally accepted notions of
appropriate city planning is warranted (Tiwari
2002). Nonmotorized transport projects are
still comparatively rare, given the huge num-
bers of nonmotorized transport users. Current
estimates show, for instance, that there are 1.4 bil-
lion bicycle users worldwide, including 500 mil-
lion in China.2
Considering the current huge Enforcement capacity
growth in developing cities
was central to
(in East Asia and Pacific, 70
percent of Regional economic successful traffic
growth), the number of urban management
transport projects appears programs.
comparatively low (see table
6.1). Over the fiscal 1995–2005 period, such proj-
ects have only accounted for between 5 percent
and 8 percent of the transport portfolio and ap-
pear to be declining slightly rather than increas-
ing, as might be expected. Chapter 7 argues that
this is partly due to insufficient capacity and/or pri-
ority in the Bank’s transport network and some-
times to taking on too few
large, complex projects that
Considering the rate
require lengthy preparation of urban growth, the
time; this important issue de- Bank seems to invest
serves serious attention by
too little in urban
management. Given the suc-
cessful outcome results re- transport.
ported (above 75 percent), the longer preparation
time with more consultation does appear to pro-
duce more positive outcomes.
African Transport and Poverty
Africa is the world’s poorest continent, and Sub-
Saharan Africa is the Bank Group’s largest Region
with the most client countries and the highest
63
A DECADE OF ACTION IN TRANSPORT
Table 6.1: Distribution of Urban Projects and Components, Closed and Active
(1995–2005)
1995–2000
Total number of urban projects
Components
Urban roads
Traffic management and safety
Institutional, regulatory, and planning
Nonmotorized transport, urban poor
Urban environment, air quality
Public transport
Source: World Bank data.
volume of IDA lending. The UN Food and Agri-
culture Organization recently warned that in 2006
some 27 countries would urgently need food aid
(BBC 2006). However, the Bank’s 2005 annual
study of the continent shows that 30 percent of
African states have managed to achieve a growth
rate greater than 4.5 percent since the 1990s and
that the number of African conflicts has fallen
from a peak of 16 in 2002 to 5 in 2005. An impor-
tant development has also been debt relief for
the heavily indebted poor
The Bank has countries, many of which are
recognized the need to in Africa. In several cases
improve feeder roads. (Ghana, for example) the sav-
ings in debt relief have made
available additional funds for poverty-reduction ex-
penditure programs.3
Sustainability is a In the transport sector two
initiatives are particularly rel-
major issue in Africa. evant; first, the World Bank
Group Africa Action Plan (box
6.3), which provides a result-oriented framework
to achieve clear goals (such as the MDGs), and sec-
ond, the SSATP, a program specifically designed to
improve transport performance in Sub-Saharan
Africa (discussed under the section on Donor Co-
operation; see box 3.1).
Bank Transport Project Performance in Africa
The Bank has recognized the need to improve
feeder roads in addition to national networks, as
64
2001–06 1995–2006
41 37 78
78 77 155
27 24 51
10 9 19
12 19 31
7 7 14
3 3 6
19 15 34
demonstrated in Burkina Faso, Ethiopia, Mali, and
Nigeria. Ratings for completed Bank transport proj-
ects in Africa at first appear favorable—78 percent
were assessed as having a moderately satisfactory
outcome or better. However, only 61 percent re-
ceived a sustainability rating of likely or better, and
only 57 percent received a substantial or better in-
stitutional development impact rating.
A closer look at outcomes also shows that one-third
of the positive ratings were only moderately sat-
isfactory, and in 10 projects the sustainability rat-
ings were categorized as nonevaluable, usually
because of political uncertainty or doubts about in-
stitutional capacity. Recently there has been some
focus on multimodal regional corridor projects to
reduce bottlenecks at international borders and to
harmonize customs and trade policies. These proj-
ects, though, have not yet been evaluated by IEG.
However, some success is evident in the Bank
Group’s increased effort with the legal and reg-
ulatory frameworks to encourage more private
sector investment (Cameroon, Mozambique, Tan-
zania, and Zambia). In Cameroon, for example, the
Ministry of Public Works was restructured to in-
clude units specifically for rural roads, and the Min-
istry of Transport was refocused on planning and
policy regulation.
Relatively few outcome objectives were directly fo-
cused on poverty reduction, although indirectly
 TRANSPORT AND POVERTY

Box 6.3: The World Bank Group Africa Action Plan

The Bank Group’s Africa-led action plan starkly observes that
Sub-Saharan Africa continues to present the world with its most
formidable challenge. During the past two decades the number of
poor in Africa has doubled, from 150 million to 300 million, more than
40 percent of the Region’s population. It has the highest poverty
incidence among all developing regions, and extreme poverty is
twice the global rate. Only 34 percent of Africa’s rural population
lives within 2 km of an all-season road. Africa is also the only Re-
gion that remains behind on most of the MDGs.
In this plan, a number of components have direct links to trans-
port. They include closing the infrastructure gap, creating an ex-
port push, developing the private sector, supporting Regional
integration, and improving governance and institutional capacity.
Other issues are the extent of improvements to rural accessibil-
ity, the potential impact of reductions in freight costs, and the
amount of the sector’s contribution to health issues, such as re-
ducing the role inadvertently played by transport in spreading
HIV/AIDS and reducing the unacceptably high road accident rate.
Many of the countries in Africa are fragile states, also known as
low-income countries under stress (LICUS).
These countries share a common fragility in two respects.
First, state policies and institutions are weak, making them vul-
nerable in their capacity to deliver services, control corruption, and
provide proper accountability. Second, they face risks from wars
and political instability. A problem that the Bank and others are only
beginning to grapple with but that badly affects the transport sec-
tor is the difficulty of retaining college-educated professionals. In
Sub-Saharan Africa skilled workers make up only 4 percent of the
total workforce, and more than 40 percent of these educated peo-
ple leave their countries in search of jobs overseas.

the poor benefited through improved accessibil-
ity and the opening up of markets. Physical up-
grading was generally satisfactory at 72 percent,
and railway and port concessions have been par-
ticularly successful at 82 percent. Other activities
scored lower, with maintenance objectives scor-
ing 60 percent and road safety 50 percent. Suc-
cesses included institutional improvements to
improve efficiency and accountability, such as the
establishment of road funds and road agencies; the
phasing out of force account maintenance in favor
of small contractors; and training initiatives for
these emerging enterprises. Zambia, for exam-
ple, generally had positive experiences in these
areas, but it could not sustain similar efforts in road
safety. A road safety action plan was compiled but
not implemented because of lack of capacity, and
the accident record actually worsened. Road safety
continues to be a concern in Africa. The Bank
needs to deploy more resources in this direction.
Bank Transport Sector Performance in Africa
Road Management and Maintenance
The Bank has had some success in moving forward
with road management, especially in countries
where responsibility for this function has been
vested in road agencies. What is difficult to pre-
dict, however, is whether Most transport projects
the progress that has been
were structured to
achieved will be undone later
by political unrest. Setbacks in indirectly benefit the
road management caused by poor.
conflicts or governance issues
abound, including in Côte d’Ivoire, Guinea-Bissau,
Liberia, Niger, Rwanda, and Zimbabwe.
Despite the fact that 27 road funds have been
established in Sub-Saharan Africa, the efficiency
of these funds is highly variable. In only one-third
of the cases are the funds able to cover routine
maintenance needs.
Lack of Capacity
A 2000 multidonor evaluation of experiences in the
road sector in Ghana concluded that the main
constraint to more rapid improvement of the in-
tegrity of the road network was the lack of capac-
ity in the Ministry of Roads
and Transport (appendix B). The Bank has had
The road program was too some success with asset
ambitious for both the fund-
management in
ing capacity of the govern-
ment and the absorption African countries with
capacity of the ministry. In established road funds.

65
A DECADE OF ACTION IN TRANSPORT

Box 6.4: Lesotho Road Rehabilitation Project—Limited Capacity Impedes Reform

Experience from four earlier Bank-financed road projects in
Lesotho showed that ongoing road maintenance activities were
constrained by a lack of sustained operational and institutional
capacity in the implementing agencies. The Lesotho Road Re-
habilitation Project (approved in 1996, completed in 2003) was
thus designed not only to restore sections of the road network
that had reverted to poor condition but also to strengthen the
capacity of the road sector agencies through policy and institu-
tional reforms.
The outcome of the project was rated moderately satisfactory.
Although some progress was made in enhancing the condition of
the overall network, improving access to several remote commu-
nities, and developing emerging contractors, the institutional ob-
jectives were not fully achieved. At midterm, only 20 percent of
the project funds had been disbursed, so $14 million of the credit
was cancelled, which meant that the upgrading program had to be
cut back.
Institutional development impact was rated modest. An action
plan for policy reform was agreed to during preparation, but progress
was laborious. Two separate rural road agencies were success-
fully combined under the Department of Rural Roads and a road fund
established, but only about 60 percent of the required funding has
been provided.
Sustainability was rated nonevaluable because of continued
uncertainty with regard to the substance and effectiveness of the
reforms. A proposal for a semiautonomous roads agency was put to
the Cabinet but rejected. A new, scaled-down proposal was then
developed, envisaging a Roads Directorate within Ministry of Public
Works and Transport. It took into account the ongoing decentraliza-
tion effort and ensured that a substantial reduction in staff would be
effected. Although the current proposal is less ambitious, it addresses
some of the core deficiencies of the current arrangements and will
provide a platform for a further projects, which can provide support
during the implementation of the new institutional arrangements.

Source: World Bank (2006b).

Where there is low countries with low insti- Because the quality of capacity building is crucial
tutional capacity, opera- in Africa, greater efforts are needed to ensure
institutional capacity,
tional staff tend to be that CASs include the specific capacity needs of
Bank staff tend to overly optimistic about the transport sector. There appears to be a ten-
underestimate the time how long it will take to dency to favor more successful countries to the
achieve legislative and or- neglect of weaker ones that need more help and
needed to make reforms,
ganizational change and that have significant numbers of desperately poor
build capacity, and build to build human capacity. people. Weak capacity leads to poorly maintained
institutions. Bank staff and clients alike infrastructure, lack of enforcement of traffic reg-
sometimes frame institu- ulations, and appalling road traffic safety records.
tional objectives and milestones that are imprac-
tical for a typical 5-year project. Fragile States
More than half of the African countries that have
This is illustrated by the very slow, incremental made limited progress in the transport sector are
progress with institutional reform in Lesotho (box also fragile states (formerly called low-income
6.4). Progress with reform in this case was hin- countries under stress [LICUS])4 and many are also
dered by weak government capacity and pro- in the lower rankings of the 2006 Corruption Per-
crastination on key decisions. Continuity and ceptions Index.5 Although the share of lending and
timing of support, as exemplified in Burkina Faso trust funds to fragile states in the Africa Region rel-
urban development and Tanzanian railways proj- ative to their population is higher than other
ects, coupled with lessons learned through pre- regions, IEG estimates that fragile states in the
vious projects, are equally important. Africa Region have the lowest number of ESW

66

products per country and a lower share of the
administrative budget. ESW for transport in African
fragile states is minimal, but this is partly explained
by the extent of work carried out under SSATP.
IDA’s performance-based aid-allocation mecha-
nism has meant that IDA financing has been a rel-
atively limited source of aid to fragile states.
Nevertheless, according to a 2006 IEG evaluation
of fragile states (IEG 2006c), some experts be-
lieve that the potential returns from aid in such
states can be extraordinarily high if a policy turn-
around is achieved, even though the risks of fail-
ure are also substantial. Selectivity and a clear
strategy are obviously important.
Liberia is a case where the recent changes in gov-
ernment have presented an opportunity to seek
a major reversal in the economy, and the transport
sector is seen by the government and the Bank
as pivotal to that effort. This opportunity for fast-
track assistance should be carefully monitored.
The Bank clearly can be stronger on donor co-
ordination in fragile states but needs to give much
more focused attention to capacity building. Other
similar transport-focused reconstruction projects
are active in Angola, the Democratic Republic of
Congo, and Sudan.
Programmatic Lending
More programmatic lending or SWAps designed
to achieve specific capacity-building objectives
may be appropriate. Special initiatives under the
umbrella of SSATP to share experiences could
also be encouraged. A capacity-building strategy
for the transport sector in each African country
could also be considered to help transport proj-
ects be more sustainable. Such a strategy could
help to inform and guide the efforts of the coun-
try programs and should include the SSATP, the
TRANSPORT AND POVERTY
WBI (with one-third of its initiatives in the Africa
Region), and the African Capacity Building Foun-
dation,6 which has not yet found an effective way
to link the ad hoc programs it funds to individual
country needs.
HIV/AIDS
HIV/AIDS has severe demographic, economic,
and social impacts that run counter to poverty re-
duction efforts and the transport sector is a major
vector for the disease. Long-haul truck drivers are
the highest risk group in the road sector (World
Bank 2004c). HIV/AIDS prevention components
have been included in some of the more recent
active transport projects
in Africa. Moreover, an HIV/AIDS prevention
HIV/AIDS framework has initiatives show promise
been developed for the but will need systematic
sector and draft standard
clauses for works con- evaluation upon
tracts drawn up. completion.
An innovative HIV/AIDS Abidjan-Lagos Transport
Corridor Project was entirely designed around
using corridor transport as a means to provide ac-
tive awareness, prevention, and treatment ser-
vices to corridor users, truck drivers, and border
communities. In Ethiopia, a country with one of
the highest number of people infected by HIV/
AIDS in Africa, the Bank, together with the
Ethiopian Roads Authority, has launched a com-
prehensive HIV/AIDS strategy for the roads sector
with three components: (i) information, education,
and communication; (ii) care and support; and
(iii) capacity building and policy development.
As baseline studies are carried out, it will be pos-
sible to gauge the outcome of this initiative. So far
this undertaking looks promising, but it is still
too early to assess the overall impact.
67
 Chapter 7: Evaluation Highlights

• Results measurement, monitoring, and evaluation all need to be

improved.
• The transport sector is now handling nearly twice the volume of com-
mitments with fewer staff than it did in fiscal 2000.
• Staff resources need to be redeployed and strengthened.
• There appears to have been a partial avoidance of projects that
require longer and more costly preparation.
 7
Internal Bank
Performance Factors
I
n November 2004, QAG completed an analysis of the transport portfolio
for 26 of 44 projects based on Quality at Entry.1 The analysis found rela-
tively few significant differences for the major dimensions between over-
all transport sector performance and the Bank average.
Project Preparation
On the positive side, the transport sector did well
on implementation arrangements, Bank processes,
risk assessment, environmental aspects, economic
justification, and arrangements for poverty and so-
cial mitigation. This undoubtedly reflects the train-
ing of the engineers and transport specialists,
many of whom are experienced project managers.
In general, lessons learned extracted from IEG
reviews of ICRs concur with these results. On the
negative side, the transport sector was less suc-
cessful than the Bank average at clearly defining
development objectives for assessing the extent
of client ownership and political willingness to
carry out reforms, and in arguing the project con-
cept based on lessons of experience.
For this review IEG added the results for the lat-
est round of QAG Quality at Entry assessments
(nine new projects). Overall, there was only a
1 percentage point change, which was not sig-
nificant. However, the analysis also shows that
improvements have occurred in partnering with
donors, realism of financial planning, and atten-
tion to gender issues. But the quality of Bank
documents, such as appraisal reports and legal
documents, has gone down slightly.
Another aspect of project preparation is the
amount of conditionality in lending documents.
The Bank’s use of such conditions has declined
sharply over the past decade because there has
been a stronger focus on country ownership of
reforms. The use of conditions in the transport
sector appears to be above
average, but this may be Good performance
due to less AAA work being on supervision is
carried out in the sector
compared with other sec-
attributable to transport
tors. Such advisory work staff knowledge and
provides an effective way experience.
to reach agreement with
clients through policy dialogue. In general, the
larger clients attract more dialogue on transport
issues, so it is generally in the smaller countries
where greater use is made of conditions.
Project Supervision
With regard to supervision, QAG showed, based
on 51 assessments of Quality at Supervision, that
69
A DECADE OF ACTION IN TRANSPORT
the performance of the transport sector is excel-
lent—better than the rest of the Bank in all cate-
gories. The latest figures for Quality at Supervision,
which include an additional 12 projects, continue
to show remarkably good supervision perfor-
mance by the transport sector. IEG found that be-
cause transport experts tend to have technical
backgrounds and many years of project experi-
ence, they are usually familiar with the necessary
requirements to ensure the delivery of well-
prepared and robust projects.
Lending Instruments
The choice of lending instrument is important.
IEG analyzed the kinds of instruments selected for
transport projects over the past 10 years (see ap-
pendix A, tables A.4 and A.5 and figure A.13).
Comparing the period fiscal 2001–06 with fiscal
1995–2000, there has been a definite swing away
from using Specific Investment Loans—from 70.2
percent down to 62.4 percent. More program-
matic type loans are now chosen, such as the
Adaptable Program Loan, which provides phased
support for long-term development programs—
each phase builds on the lessons of the previous
phase—as well as Programmatic Sector Loans
and Programmatic Structural Adjustment Loans.
In IEG’s view, the move toward programmatic
loans is a positive step because it enables a broader
view to be taken and enhances country ownership.
Preliminary results from other sectors such as
health suggest that programmatic loans lead to
better policy dialogue and a better approach to
capacity building.
Results Measurement
Monitoring and Evaluation
Results measurement is still one of the weaker
areas of Bank performance in the transport sector
even though there are signs that an effort is being
made to improve this situation. Very few projects
completed and evaluated by IEG had specific mon-
itoring and evaluation development objectives; of
Results measurement those that did, paradoxically, only
one-third of the outcomes were
remains weak but is satisfactory. QAG, on the other
improving. hand, rated monitoring and eval-
70
uation as satisfactory at entry in 67 percent of
projects reviewed. IEG observed that there are se-
rious attempts in more recent projects to include
a considered matrix of development indicators
and a log-frame in the appraisal document and
ICR, but many of these projects are still active and
have yet to be reviewed by IEG.
The main problems remain a lack of baseline in-
formation and a lack of capacity to undertake the
monitoring function. In some instances IEG ob-
served that indicators proposed at appraisal were
abandoned when it was realized that they were im-
practical. New indicators were then formulated
but were sometimes compared with projections
in the last project status report rather than the
original appraisal benchmark.
In some instances the focus continues to be on
outputs rather than outcomes. The Middle East
and North Africa Region had a workshop in 2004
to develop pilot indicators for rural access. The
idea was to demonstrate to borrowers the value
of establishing and maintaining performance in-
dicators. Morocco was used as an example (ap-
pendix B). In this case the benefit of the indicators
was demonstrated and resulted in an extensive
rural access program. However, the case study
shows that a comprehensive approach is needed
to gather data and that government ownership is
critical. In the future the revised ICR guidelines are
expected to lead to a behavioral change with re-
spect to results measurement, because staff will
be aware that the performance of projects in mon-
itoring and evaluation is to be specifically assessed.
Transport sector management has committed to
strengthening sector indicators in line with the in-
frastructure action plan, and the first “headline in-
dicator” established is for rural accessibility.
“Sustainable access to rural transport” measures
the number of people who live within 2 km of an
all-season road. Results from 31 countries repre-
senting 83 percent of the total rural population
in all IDA countries show that, on average, 64
percent of rural dwellers have access to the trans-
port network. Other indicators under develop-
ment include urban mobility (mean time for

journey to work), road condition (percentage of
network in “good” and “fair” condition), and trade
logistics (composite index comprising inventory,
transit time, customs, and handling productiv-
ity). The SSATP is also undertaking work in this
area, as the Africa Region data are often particu-
larly poor.
Setting Clear Objectives
Another important measurement area is per-
formance against development objectives. Over
the review period, IEG found projects with vague
objectives (Burkina Faso, China, and Comoros)
and overly ambitious objectives (Turkmenistan)
and a case where the development objectives
and indicators were not formally revised despite
major changes in project direction and scope
(Bangladesh). Other projects had objectives that
were difficult to meet because they were too spe-
cific (Zambia) or just too numerous (Rwanda had
14). But there are also many examples where just
the right balance seems to have been achieved
(among them Lao PDR and Mauritius). The QAG
score of satisfactory or better for the clarity, real-
ism, and scope of the project’s development ob-
jectives is 64 percent (8 points lower than the Bank
average), which supports IEG’s findings.
In the transport sector in general (except for
revenue-earning entities) there is a shortage of
good global and regional supporting data in com-
parison to, for example, the agricultural, health,
or housing sectors where a UN agency takes re-
sponsibility for the data-gathering function. At
the local level it would be extremely useful if task
team leaders were able to assess changes in road
freight rates on completion of road projects—this
was done very effectively in Peru. Similarly, urban
and rural public transport service frequency and
accessibility can be used to assess the effective-
ness of new investments.
In the past, when the focus was often on intercity
roads, the standard engineering models would suf-
fice. But increasingly there is a need to look at the
rural access and urban situations where a differ-
ent kind of information is needed. This is clearly
a serious gap in the transport sector approach at
I N T E R N A L B A N K P E R F O R M A N C E FA C T O R S
present. Data for railway, The development of
port, and aviation projects
project objectives
are normally adequate be-
cause of the scale and ac- suffers from lack of
countability requirements management attention.
of the operations and the
collection of data, either because the data are na-
tionally owned or because the operators process
their traffic through a national data collection
agency, such as customs or immigration. It has
been part of the Bank’s role to try to ensure that
any uneconomic services are transparently iden-
tified so that it is clear how such services are
being subsidized. This is not always easy to unravel
from railway accounts, where there are numerous
joint costs attached to different services.
Assessing Efficiency
Most Bank-financed road projects are justified by
an economic appraisal based on transport cost sav-
ings. Net present values and ERRs are often cal-
culated using the Highway Development and
Management System known as HDM-4. For low-
volume roads the Roads Economic Decision
Model performs an economic evaluation of road
investment options using the consumer surplus
approach. Neither of these models looks at the dis-
tribution of the benefits or at the wider impacts
and multiplier effects on the economy.2 For im-
pacts on the poor some information is available
from the impact studies undertaken in Brazil and
Morocco (appendix B); further information may
be available soon from Ghana. Table 7.1 shows
ERRs before and after for a sample of 96 transport
projects.3
Of note is that, on average, Most transport projects
the ERR for road projects
was similar at appraisal and
calculate rates of return
completion, but the ERR but seldom consider the
for rail and port projects wider distribution of
tended to underestimate
project benefits.
the costs and overestimate
the benefits at appraisal. Given that IEG looks
for a minimum ERR of 10 percent on infrastruc-
ture projects, the results below in general look
good. But the cutoff at this level is possibly too
low4 because so many projects qualify and the
71
A DECADE OF ACTION IN TRANSPORT

Table 7.1: Average Economic Rate of Return of Transport Projects,

Approval Years 1995–2005

No. of No. of
projects projects
with ERR ERR at ERR with ERR ERR at ERR
estimates appraisal range at estimates at completion range at
Mode at appraisal (%) appraisal completion (%) completion
Multiple modes 13 36 (16–91) 11 31 (14–78)
General transport (urban) 11 26 (13–40) 8 30 (13–60)
Roads and highways 59 29 (12–65) 53 29 (10–79)
Trade facilitation 1 19 19 1 27 27
Railways 7 32 (15–68) 5 22 (–14–64)
Ports and waterways 5 26 (18–37) 4 16 (11–22)
All transport 96 30 (12–91) 82 28 (–14–79)
Source: IEG data.
Note: ERR = economic rate of return.

HDM-4 factor for time savings on road projects
may be exaggerated, according to some experts
(Carruthers, Bajpai, and Hummels 2003).
Results measurement could also be used more ef-
fectively to settle important areas of controversy.
The sustainability of the strategy of using road
funds and road agencies will continue to be ques-
tioned until there has been a thorough study to
measure their impact over a period of years, prefer-
ably in Africa. Until now the evidence has been pos-
itive but not conclusive. A good example may be
Ethiopia, where a Monitoring and Evaluation Unit
has now been established. The SSATP has also
commissioned further work on this topic.
Transport Sector Staffing
Fiscal 2000 commitments by the transport sector
were $1.7 billion (18 additional projects to the ac-
tive portfolio); by fiscal 2004 they had increased to
$3.7 billion (31 additional projects) and appear to
be stabilizing at $3.5 billion. In contrast, in June
2000, the total number of Bank transport profes-
sionals was 141, but by June 2005 the number had
fallen to 133. Although there
Lending has more than is a trend toward larger proj-
doubled in the past five ects, the average workload
years, while the staff per staff member has clearly
increased. According to the
complement has 2006 strategic update staffing
stagnated. paper (World Bank 2006f ),
the number of staff Bank-wide has been in decline
since fiscal 2004; projections for rebuilding the
Bank’s skills base have not materialized because of
continued business uncertainties. Some infra-
structure sectors such as transport, however, ap-
pear to have been hit harder by flat or lower budgets
because their commitment rate was rising at the
time the budget constraints were introduced.
The IEG (fiscal 2006) interviews of a sample of 36
of the 122 specialists and task team leaders (ex-
cluding managers) found that Washington-based
staff working in operations spend, on average, 4.6
months on mission. (The figure for Anchor staff is
3.6 months and for country office-based staff is 3.7
months.) About 53 percent of respondents said this
was too long, and there was a close correlation
between persons spending more than 4 months
away from home and those who believed they
were overloaded. No comparable figures were
available for the Bank as a whole; the 2006 strate-
gic update staffing paper (World Bank 2006f) does
discuss the heavy demands of travel, which often
takes time away from weekends and holidays, es-
pecially in Regions where missions are longer. Re-
cuperation and family time after long missions are
often minimal.
Respondents indicated that three areas suffer
when a high workload is perceived. The first is the
ability of the staff member to keep up with new

72

developments in his or her area of expertise and
to participate in thematic discussions. The second
is the time to disseminate his or her knowledge
in the field, and the third is a tendency to avoid
overly complex projects. Some commented that
while “financial productivity”—in the sense of
the time to move a project from identification to
approval or the operational cost per project—has
improved, there may be a hidden price for this re-
sult, both in quality and in what can no longer be
done in other areas.
The “high pressure” created by this situation has
also been a recurrent theme in the QAG panels’
criticisms of transport operations. Those criticisms
include excessive narrowness and lack of ambition.
For example, one urban transport project in the
Philippines was described as “technically sound, but
narrowly conceived.” The project missed an op-
portunity to address broader, long-neglected pol-
icy issues, as this was the first urban transport
project in a decade in the country, and no urban
specialist was consulted by the transport team.
IEG findings, including feedback from staff and
stakeholder interviews, confirm the general per-
ception that complex, high-impact projects are
sometimes deferred in preference for simpler proj-
ects with shorter lead times that have less impact.
When staff interviewees were asked, for example,
what in their opinion constrained the sector from
undertaking more urban transport projects, the
response was invariably the time taken to prepare
projects in a complex environment in which there
were multiple stakeholders, and environmental
and safeguard issues, including the relocation of
many more project-affected persons.
The recent referral of the Mumbai Urban Transport
Project to the Inspection Panel5 was cited as an ex-
ample of the hazards of increasing complexity.
However, the results of the work on resettlement
in Mumbai may prove in time to be more valuable
than the physical outcome of the project. Some
staff indicated that there was no internal incentive
for them to get involved in more difficult, time-
consuming, and risky projects; indeed, the na-
ture of complex projects with many safeguard is-
sues acted to discourage task team leaders. Others
said there was a tacit understanding in some
I N T E R N A L B A N K P E R F O R M A N C E FA C T O R S
countries that because the Apparent “productivity
Bank’s processes were elabo-
gains” have hidden
rate, other financiers might be
preferred for urban projects. costs.
A further factor has also been the restriction on
subsovereign lending. There is currently an on-
going discussion as to how the Bank Group can
establish a Sub-National Development Program,
and further investigation of risk-sharing, legal,
and other issues on this matter is in progress.
Although the Bank urban strategy review Cities
on the Move (World Bank 2002a) provided a
broad strategic framework for dealing with urban
transport projects, sector management has not
yet finalized a plan to fully operationalize this
framework.
The main risk of undertaking Attrition due to
more complex projects is that
retirement is a
because of longer prepara-
tion time, fewer projects over- concern.
all will be completed with the same resources. It
is also possible that the number of successful
projects will decline because there are more fac-
tors that can go wrong and more stakeholders to
be satisfied. Nevertheless, the world is inexorably
becoming more complicated, and this means that
the Bank must prepare itself to meet such com-
plexities head on. Although this is a riskier strat-
egy, it is clearly the right way to go.
Another area of concern is the number of senior
staff approaching retirement—some 17 percent of
the current professionals are due to retire in the
next 5 years; this pattern is not unique to the
transport sector, as the Bank as a whole is antici-
pating an increase in attrition. However, the loss
of experienced personnel is a concern, especially
because based on past experience, only a few staff
are likely to be retained as consultants after re-
tirement. Some respondents also mentioned the
apparent long lead time to replace lead interna-
tional experts. These problems are being addressed
through targeted recruitment of new experts and
batch recruitment of specialists and task team
leaders. But respondents in general recognized that
they were working in a difficult environment be-
cause of the shortage of senior staff and the im-
plementation of a strict cost-containment regime.
73
A DECADE OF ACTION IN TRANSPORT
Excessive controls Some transport interviewees in-
dicated a lack of commitment to
may do more harm
the matrix management system
than good. or believed it did not add suffi-
cient value. Others were more
concerned that the lack of resources restricted the
Anchor’s capacity to provide guidance in key
areas. Several country office-based staff believed
that decentralization had not gone far enough
and that there should be more delegation to staff
working at the country level. There was a measure
of reluctance on the part of headquarters staff to
consider working in country offices, especially in
fragile countries, because they felt it damaged
their career prospects and negatively affected
their families in a number of ways.
Other issues raised by staff included a need to work
more efficiently and smartly, as well as a need for
greater flexibility in the application of safeguard
policies. On this last point QAG refers to the “par-
74
adox of compliance,” in other words spending
great effort doing no harm, but at the cost of
doing little good. The example cited in an urban
transport project was the extraordinary admission
that “to comply with safeguard policies, the team
has dropped all components with major resettle-
ment.” Although this is an extreme case, in IEG’s
view, based on the portfolio analysis and interview
results, the issue remains a serious concern.
Very few staff seemed to have considered an al-
ternative paradigm in which greater selectivity of
projects is made. The quantity of projects would
be reduced, but the quality of Bank output would
improve substantially. The selection of projects
currently tends to be demand driven, but there
is a case that if the Bank entered into greater dia-
logue with its borrowers about future transport
sector scenarios, there might be a small but sig-
nificant shift in the mix of projects and AAA work
undertaken.
 8
Findings, Lessons,
and Recommendations

T
his final chapter reviews the findings and lessons from the IEG evalu-
ation. It also provides recommendations to management to improve
Bank effectiveness in the transport sector. It recognizes that the world
is changing rapidly and that the Bank will have to be flexible and adapt its sup-
port programs to meet the emerging challenges.

Findings and Lessons
Current World Bank transport strategy is founded
on the three pillars of private sector involvement,
continuing sustainability, and development of an
appropriate urban strategy. This foundation re-
mains relevant today but requires adjustment to
the more complex emerging environment. The
past is not necessarily a guide for the future, even
when a sector has a solid record of achievement.
It will be necessary to shift from a “cylindrical” or
“silo” approach to a more sector-interlinked ap-
proach. This may or may not require more re-
sources, depending on the relative priority of
transport to competing needs, but it will certainly
entail a smarter use of resources.
Role of the Public and Private Sectors
The Bank’s encouragement of greater private sec-
tor participation in the transport sector where fea-
sible is supported by this evaluation’s findings.
International experience generally—and Bank
Group experience in particular—shows that this
approach has usually led to significant improve-
ments in transport sector performance. How-
ever, for various reasons, some countries prefer
not to opt for full privatization in favor of more
modest models of private sector participation.
Bottlenecks in transport result from inefficien-
cies in the use of available resources, lags in the
engineering and managerial technologies applied,
and failures to make timely investments in ca-
pacity expansion. This evaluation indicates that the
most positive impact of changes in the public-
private sector balance will be cases that can either
sharply reduce such inefficiencies or significantly
raise the productivity of the capital stock already
invested in the sector. Improvements in trade
prospects and technological advances (such as
electronic pricing techniques or the increasing
scale of ships and aircraft) suggest that there is still
substantial scope for further gains of this sort.
The impact of privatization has usually been more
significant when the privatization process includes
measures to reduce the amount of regulation of
the mode concerned and when the structures of-
fered to private bidders are designed to sustain
competition. At the same time, for impact, ap-
propriate measures need to be taken to ensure

75
A DECADE OF ACTION IN TRANSPORT
access of competing providers to any facilities
with local monopoly characteristics. Although
there is less scope for private sector involvement
in the poorest countries, a major reason for the
success of several concessions has been the Bank’s
willingness to fund retrenchment costs and pro-
grams to improve opportunities for workers who
now have to make a different choice of livelihood.
Full transport concessions remain concentrated
in middle-income countries, where the volumes
of traffic are attractive and there is sufficient pub-
lic sector capacity to engage with the private sec-
tor. IEG recognizes, however, that the positive
impact of even one or two concessions in a lower-
income country can have a dramatic effect. Actual
possibilities of attracting private capital into trans-
port infrastructure vary greatly over time and
among countries. But there are instances in ports
and large bridges, where even poor countries
with uncertain prospects have been able to attract
foreign private sector interest at certain stages in
the financial markets’ cycle. A further aspect to
consider is that several countries, especially in East
Asia and the Pacific, are poised to attain middle-
income country status. This means that the Bank
must remain competitive in the assistance it can
offer with respect to PPPs.
One aspect in which the public sector frequently
needs strengthening is strategic and structural
planning, most particularly when increased private
participation is being considered or is undergo-
ing its running-in period. Government has an ir-
replaceable planning role in transport. This is
partly because of the need for active consensus
building among the different modes to maintain
an effective integrated system. But it is also due
to the importance of transport infrastructure,
and especially the road and rail networks, in struc-
turing land use and regional development more
generally. Multimodal strategic planning is par-
ticularly crucial at the national and metropolitan
levels of government.
In parts of Asia and Africa where the study team
inquired into reasons for the absence of reforms
that have proved productive elsewhere, the main
obstacle to progress appears to be local fears
76
among labor, but also among concerned bu-
reaucrats and less dynamic enterprises, of losing
their acquired positions. This problem is often ex-
acerbated by laws and regulations, often dating
back several decades, which may never have been
sound but have built up over time an array of
supporting interests. Bringing about changes in
public-private balance requires multiple scarce
political skills, particularly of communication to
generate wider understanding of the opportuni-
ties being missed; of alliance building, to gather
political support; of negotiation, to win the tol-
erance of those who expect to suffer; and of ef-
fective implementation, including respect for the
rights of all concerned.
Considering distributional as well as environ-
mental aspects of projects, there would seem to
be a need for more combinations of larger-scale
public and private financing than is so far gener-
ally undertaken in developing countries, more
along the lines of some recent projects in conti-
nental Europe. This can bring the advantages of
private management into areas that have high
economic priority but cannot be expected to be-
come financially viable rapidly.
Maintenance, Institutional Development,
and Environmental Protection
Improving the strength and efficiency of the private
sector role in road maintenance is a matter that re-
mains important in all countries, as different stages
of development are achieved and new techniques
are developed. Key components on the public
side include serious commitment at the highest
level within each concerned body to the elimina-
tion of corruption and achievement of high stan-
dards of governance; development and continuous
updating of the management information systems;
both central and decentralized capacities for plan-
ning and contract management; adoption and sys-
tematic enforcement of transparent competitive
bidding practices; financial flows to the different lev-
els of government involved; and gradually in-
creasing use of performance-based contracting.
Important contributions from the private side (with
public support) are training, development of com-
mercial equipment-supply enterprises, and an ef-
fective contractor association.

Linked to this is the effectiveness of governance
and capacity building in the sector. By and large,
technical assistance to strengthen client capacity
has had modest results in low-income countries
but better results in middle-income countries.
While the road agencies and some of the railway
reorganizations have demonstrated continuing
support and success, in many other cases train-
ing has been aimed at assisting the immediate
project and is therefore less likely to have any sus-
tained impact. Typically, the timing of training in-
terventions is not always synchronized with the
necessary organizational changes needed to im-
prove public sector performance. Institutional
change takes time, and often the life cycle of the
project intervention is relatively short—about 5
years; this is often insufficient to ensure lasting
results. Institutional objectives need to be de-
signed more realistically and be pursued incre-
mentally; that kind of continuing support program
will often extend beyond the transport sector
itself.
A further lesson is the need to choose a single clear
criterion for selecting a prequalified bidder. Con-
tention among interested parties and at the po-
litical level seems to be minimized by using the
relatively simple and straightforward criterion of
maximum payment (or minimum subsidy de-
manded) for the right to provide services. Services
must meet the performance standards specified
in the tender documents.
There is sufficient evidence to show that the use
of second-generation road funds, especially in
Africa and Central America, has met with modest
success—in a few cases substantial success. The
Bank has learned to be pragmatic and tends to
promote road funds only when the budget ap-
proach has failed. The Bank has learned as well
to take into account the different circumstances
prevailing in each country. In some countries
where second-generation funds have been in-
troduced, there is evidence of an increase in the
percentage of roads in good condition. However,
in one-third of Sub-Saharan African countries with
road funds, the income is insufficient to cover rou-
tine maintenance costs. Nevertheless, the flow of
funds has become more stable and predictable.
F I N D I N G S , L E S S O N S , A N D R E C O M M E N D AT I O N S
Road funds, however, should not be contem-
plated where there is a high level of corruption
or where there is little likelihood of having inde-
pendent audits and transparent procurement. It
would be beneficial if a rigorous study of the im-
pact of the successful road funds could be un-
dertaken to show why they have succeeded.
Nevertheless, road funds often come as part of a
package that leads to improvements in road de-
partment accountability. This can be attributed to
the establishment of road agencies and road
boards and contracting out to the private sector,
not only of construction and rehabilitation but also
of routine maintenance, design, and general su-
pervision. Transparently competitive tendering
of works against performance-based specifica-
tions has been a very significant step forward, as
has the representation of the public and user
groups on road boards.
In general, both client perspectives and pertinent
documents show that there is positive support for
the Bank’s actions in ensuring environmental sus-
tainability and providing safeguards for people
affected by new projects. There is also general
support for capacity-building activities and assis-
tance with coordination between institutions and
even different tiers of government. The demand
for roads is likely to continue unabated, but there
is recognition, at least in middle-income coun-
tries, of the importance of environmental, social,
economic, and institutional issues related to city
growth. Stakeholders saw relative neglect of both
urban transport and intermodal efficiency. Some
also perceived slowness in the Bank’s decision-
making processes.
Poverty Reduction
There has been an important shift in mind-set. The
old mind-set said that the objective of a transport
system in a developing country is to build the best
transport system that can be afforded. Now the
objective is to design a system that optimizes
transport as an intermediary good to achieve a
sound poverty-reduction strategy, obviously within
resource constraints. Poverty-reduction projects
are often multidisciplinary, and experience shows
that when the transport component is small and
77
A DECADE OF ACTION IN TRANSPORT
the project falls under a sector board other than
transport, the outcome is often unsatisfactory.
The need for guidelines for and/or oversight of
these components is apparent.
When a country has very limited resources and se-
vere capacity constraints, a programmatic ap-
proach to roll out development assistance, in
consort with other donors, may be the most ef-
fective way to proceed and build capacity. Capac-
ity building, especially in fragile states, takes time,
and it is necessary to be realistic about what can
be achieved and how it can be achieved. A phased
approach appears to yield the best results, be-
cause each phase can build on lessons from pre-
vious phases; the work plan may also have to go
beyond the immediate project and sector to be
fully successful. Clear milestones are essential.
The needs of the transport sector are changing,
and the composition of the sector portfolio may
be cause for concern, with its heavy emphasis
on intercity highways. Analysis of input from stake-
holders and staff elicited a view that the Bank
should perhaps be taking on more projects in
rural access, urban transport development, and
multimodal transport. Given the implications of
this for achieving the MDGs, there should be a
more informed debate about relative priorities
when CASs are prepared. Because the Bank fi-
nances just 2 percent of total infrastructure spend-
ing in developing countries (Oxford Analytica
2005), it should try much harder to achieve the
best balance between financing high-priority but
less-challenging projects and ones that will demon-
strate new ideas and approaches.
Evidence from both IEG and QAG suggests that
over the past 10 years transport in general has
been an efficiently run but sometimes insular
sector. The present operational strategy will not
necessarily continue to be appropriate in the fu-
ture. In particular, the relative neglect of knowl-
edge dissemination, both internally and externally,
is significantly less than would reasonably be ex-
pected from such a large sector. Although some
important AAA work has been carried out in sev-
eral countries, the effort is spread rather thin,
and awareness of this high-quality work is not
as widespread as it should be. Better linkages
78
could also be made with research institutions,
and internally the sector needs to change the
perception that it has few research needs. Firmer
information is needed about the relationships
between transport and poverty, as well as about
the added value the Bank can deploy when it
supports such projects.
Future Challenges
Sector leadership, in IEG’s judgment, has cor-
rectly identified the future challenges of the 21st
century in its draft update of strategic priorities.
Through the strategy it wishes to support the
MDGs more fully by refocusing emphasis on is-
sues such as the provision of clean, affordable, and
safe transport. This does not imply that the de-
mand for traditional highway financing is expected
to decline but rather that emerging additional
priorities will have to be addressed and cus-
tomized on a Regional and country basis. Such a
shift would not be a unilateral decision by the
Bank; it would result from a gradual concerted ef-
fort to encourage clients to put forward more
projects relating to emerging issues. Inspection
of the list of projects now in preparation shows
that this is already happening.
The arguments in support of improving trans-
port affordability are strong. Affordability cuts
across the entire transport spectrum and the sug-
gested increased focus on the rural and urban
poor fit well with the poverty-reduction agenda.
This will entail closer cooperation with the health
and agriculture sectors and with experts in the so-
cial, gender, urban, rural, and human development
fields. More projects aimed at removing cross-
border trade barriers will also reduce freight costs
and improve the affordability of consumer goods
and inputs into the productive sectors. The in-
terface here is with industry, trade, energy, fi-
nance, and resource management. The shift
toward more multimodal operations, including
supply chain management, is already apparent.
The greater emphasis on safety also supports
those MDGs that address health issues. Every year
more than 1.2 million people are killed and up to
50 million more are injured on roads worldwide;
the prediction that by 2020 road accidents will be-
come the third-largest contributor to the global

burden of mortality and injury is hardly surprising.
Bank-financed projects until recently have rarely
tackled road safety holistically, but there is evidence
that new road safety approaches are being pursued
in all Regions—not just in urban areas but also on
intercity highways and rural roads.
Add-on safety components in rehabilitation or con-
struction projects may have resulted in the intro-
duction of some safety features or the elimination
of accident “black spots,” but they were never
going to introduce significant, meaningful institu-
tional change. An alternative approach, based on
large multisector projects involving education,
policing, health, works, and other departments, is
under development, but more coordination is nec-
essary to achieve improved results through better
standards, implementation, and enforcement.
Aviation safety has become an important and
even controversial topic as well because certain
developing country airlines with poor safety
records have been banned from the airspace of
industrial countries. There is now a move to sub-
stantially upgrade both aviation safety and secu-
rity in developing countries, especially in Africa,
and the Bank is expecting to sustain the recent in-
crease in projects of this nature.
Air quality has assumed new importance with the
growing number of motor vehicles contributing
to the volume of greenhouse gas emissions (Stern
2006). Road transport alone accounts for nearly
a quarter of the man-made gases believed to be
contributing to climate change. Pollution, noise,
ugliness, and wasted time caused by traffic con-
gestion also impose substantial societal costs. This
is a powerful reason to increase support to urban
transport; it provides opportunities not only to re-
duce air pollution and other environmental dam-
age but also to explore ways to reduce the
long-term energy demand through traffic man-
agement and pricing, constraints on the use of pri-
vate cars, and greater support for mass transit
systems and public transport in general.
London has successfully introduced a central city
access charge,1 while Austria, Germany, and
Switzerland have created electronic systems to
charge trucks for the costs that their movements
F I N D I N G S , L E S S O N S , A N D R E C O M M E N D AT I O N S
impose on the roads. Such advances in technol-
ogy are expected to spread at least to middle-in-
come countries in the near future.
The Bank has already discovered that it can ob-
tain greater leverage from sources of funding
such as the Global Environment Facility and the
UN Environment Program. Carbon finance ini-
tiatives in future years also have the potential to
fund global research projects. The UN Environ-
ment Program recently launched a multimillion
dollar public transport project covering three pol-
luted cities in Latin America. In Europe an emis-
sions trading scheme, which imposes carbon
dioxide emission limits on factories and power sta-
tions, has been introduced as the mainstay to
meet its Kyoto Protocol goals. Transport will be in-
cluded in 2013.2
However, caution is needed in the approach to
these issues, especially in smaller countries. In
Madagascar, the authorities did not see clean air
as one of the country’s most pressing priorities,
and this aspect was dropped from the project. An
area of controversy as to whether the Bank should
be adopting OECD best practice emissions tech-
nology or older technology for developing coun-
tries has probably also not yet been fully resolved.
The Bank needs to reach internal consensus on
how it should advise its clients.
The rapidly increasing interaction between trans-
port and other sectors is an important matter;
there is no doubt that transport is developing
into a complex multisectoral business. But it is not
yet clear whether the present deployment of in-
ternal resources available to the transport sector
will be sufficient to meet these additional chal-
lenges as well as the substantial demand for the
more traditional road-related projects. To IEG it
appears unlikely that these new priorities can be
achieved meaningfully without either scaling up
support or reassessing sector priorities and en-
gaging with greater dialogue with borrowers.
The next generation of projects will increasingly
be located in urban areas, and the Bank will be ex-
pected to provide more support to the larger mu-
nicipalities, metropolitan centers, and peri-urban
areas. This will require working across sectors
79
A DECADE OF ACTION IN TRANSPORT
through multisectoral teams and will generate in-
creasing complexity in business. IEG notes that this
trend has already begun; in table A.7 it can be
seen that for projects in the pipeline there is al-
ready a clear evolution toward more multimodal
projects and fewer roads and highways.
Nonlending assistance in the transport sector ap-
pears to be of good quality but in quantity is in-
sufficient. If it is to progress beyond its present
status, it needs to be planned more strategically
with better resources and more interaction with
both staff and clients. This implies much more ef-
fective sharing of resources between networks;
clearly the recent merging of the Infrastructure
with the ESSD Network is a positive step in this
direction.
An additional factor to consider is the pace of
change in the business environment. For exam-
ple, in the coming decade many East Asia and Pa-
cific countries will attain middle-income country
status, effectively changing the nature of the de-
mand for Bank services. Examples of where the
Bank is proactively offering new products and
services to remain competitive in comparison
with other international financial institutions in this
domain include reimbursable technical assistance
in Saint Petersburg, Russian Federation, and
knowledge partnerships with Thailand. Although
these initiatives have not been formally evalu-
ated, the trend toward more innovation is clear.
Other potential growth areas include introducing
subnational lending through a new facility (sub-
ject to the caveat that some national governments
are worried about subnational debt sustainability).
Capacity at the subnational level varies consider-
ably. For example, in the Middle East and North
Africa, few cities would contemplate taking on
additional debt. However, in other cases there is
a great opportunity because the Bank’s compar-
ative advantage lies in helping build capacity at a
subnational level in support of national govern-
ments. This strength is expected to leverage ad-
ditional finance for infrastructure.
The anticipated increased dialogue with clients on
all these issues will have to be supported by in-
80
creased ESW activity, especially with respect to
PPPs, including greenfield projects. More knowl-
edge service products with mechanisms such as
peer-to-peer exchanges and twinning arrange-
ments will provide an environment for better out-
comes; but they will also carry greater risks for
successful implementation because of increasing
complexity and multiple stakeholders. The higher
reward-higher risk mix may affect the measured
portfolio quality in the future, although complex
urban transport projects have historically shown
consistently good results. It is clear, however,
that if more complicated projects consume a
greater quantity of resources, then fewer proj-
ects can be completed overall.
More programmatic lending and SWAps may be
one way to help the Bank use resources more ef-
fectively and productively. The possible advan-
tages of pursuing this approach are stronger
country ownership and leadership, better policy
dialogue between the partners and stakeholders,
greater focus on results in a programmatic frame-
work, economies of scale, and likely a better ap-
proach to capacity building. Possible difficulties
with SWAps include disconnects between the
agendas, policies, and procedures of participating
donors. Transport sector SWAps have commenced
in several countries; the proposed self-evaluation
of their outcomes and the sustainability thereafter
will be further studied with great interest. Finally,
the unique efforts in Africa through SSATP to pro-
mote knowledge sharing will also need to be in-
dependently reassessed in the near future.
Recommendations
• Ensure that the focus of the Bank’s transport
operations goes beyond intercity highways
and gives more attention to issues of growing
urgency, including environmental damages,
energy efficiency and climate change, traffic
congestion, safety, affordability, and trade. This
could entail a trade-off between a portion of the
traditional highway business and the newer,
more complex challenges.
• Prepare a Bank Group transport strategy with
a sixfold emphasis: (i) greater attention to air
and water pollution and realizing environ-

mental gains; (ii) achieving greater synergies
across relevant sectors—building on the merg-
ing of the Bank’s ESSD and Infrastructure Net-
works; (iii) enhancing knowledge sharing and
analytical and advisory services and their con-
tribution to country strategies; (iv) continuing
to support private sector participation through
close coordination among the Bank, IFC, and
MIGA; (v) increasing attention to governance
and corruption issues; and (vi) redeploying
staff and budget resources accordingly.
F I N D I N G S , L E S S O N S , A N D R E C O M M E N D AT I O N S
• Build up the sector’s monitoring and evaluation
efforts and align them with the new strategy, in-
cluding through (i) the development over the
next year of relevant intermediate indicators ap-
plicable to the broad range of projects; (ii) the
launching of an enhanced program of rigorous
impact evaluations for selected programs; (iii)
a comprehensive self-evaluation of the experi-
ence with SWAps within 3 years; and (iv) an in-
dependent overview of the SSATP Program
within 2 years.
81
APPENDIXES
APPENDIX A: STUDY LOGIC AND STATISTICS
The full background papers and country case
studies are available as separate documents. A
complete list of active projects is also available, and
is summarized in table A.9.
Methodology
This study is the first Independent Evaluation
Group (IEG) evaluation of the entire transport
sector. In the past only subsectors such as urban
transport, railways, and ports have been reviewed.
The evaluation uses the IEG-World Bank objectives-
based evaluation methodology in which per-
formance is evaluated by measuring the Bank’s
progress toward its transport objectives. There are
four such objectives: (i) encourage competitive
markets and help to balance the roles of the pub-
lic and private sectors; (ii) help clients achieve sus-
tainable management of the sector; (iii) support
transport investments to contribute to poverty re-
duction; and (iv) respond to changes in the en-
vironment to meet new challenges such as
globalization.
The review covers the period from July 1995 to
June 2006, during which time there were 642
projects with transport components in the port-
folio. Of these, 335 have closed and 284 have
been evaluated by IEG; 307 projects are still ac-
tive. The extensive, customized database cover-
ing all transport modes provides the foundation
for the analysis of project performance, their re-
sults, and the lessons learned from that experi-
ence. Bank transport projects are considered first
in terms of projects formally allocated to the
Transport Sector Board and second for com-
pleteness of all projects containing a transport
component, irrespective of which Sector Board
is responsible. This covers project components
under the urban, rural, private sector develop-
ment, public sector governance, social develop-
ment, environment, poverty-reduction, and other
boards. However, interpreting the results of these
projects requires caution, as most ratings in these
cases refer to the main project and not necessarily
to the transport component.
The portfolio analysis is complemented by a re-
view of the academic and professional literature
on transport issues in developing countries as
well as by nonlending assistance in the form of
World Bank economic and sector work (ESW)
and strategy documents. With regard to public and
private financing of transport infrastructure and
services, it was necessary to first undertake a
background review of evolving global experience
since 1995, against which the Bank’s endeavors
could be benchmarked.
To gain insights into operational issues and per-
formance, particular attention was given to IEG
transport Project Performance Assessment Re-
ports (PPARs). Field visits for these evaluations
were undertaken during the study period; 20
completed between 2003 and 2005 were specifi-
cally selected with this study in mind. These re-
ports provide a spread of results across the main
modes and the six Bank Regions.1 In addition,
three transport country case studies were se-
lected for more detailed analysis: Brazil, India,
and Tanzania; information from two completed im-
pact studies in Brazil and Morocco, a special mul-
tidonor evaluation in Ghana, and an African
multidonor assistance program known as the
Sub-Saharan Africa Transport Policy Program
(SSATP) are included as well. Other case studies
are included as boxes to illustrate particular
examples of successful interventions. The map
in figure A.1 shows the location of cases and
85
A DECADE OF ACTION IN TRANSPORT
Figure A.1: Location of Supporting Studies
Romania,
2005
Bulgaria,
2005
Morocco,
1996
Honduras, Brazil,
2004 1997
Ghana,
2000
Lesotho,
Brazil (2),
2006
Project performance assessment
Case study
project assessments; for more detailed informa-
tion on all the above reports, see annex B.
An area of particular interest to the Bank is the ef-
fectiveness of road funds, an instrument used to
redress the long-term underfunding of road main-
tenance. Over the past 10–15 years many Bank
projects or sector reviews (especially in Africa)
have supported the restructuring of road man-
agement and road maintenance finance, includ-
ing creating independent road boards, establishing
road agencies, and setting up road funds. Be-
cause of the importance of this issue, a back-
ground paper on this topic was commissioned as
an input to the study.
The methodology also includes the results from
structured interviews of one-third of Bank trans-
port network staff. These were used to understand
staff views on the performance of the transport
portfolio, as well as issues arising from their ex-
86
Russian
Federation (2),
2004
China, 2005
Turkey,
Vietnam (2), 2003
2004 India, 2006
Yemen,
Republic of (4),
2004
Mauritius, 2005
2005
Tanzania (2),
2005
Impact evaluation Special study
perience and ideas about how to improve Bank
efficiency, and to try to understand the pressures
under which they work. Both open-ended and
specific questions were put to the 36 randomly
selected staff members, covering task team lead-
ers and specialists in the transport network en-
compassing all Regions, including the Bank
headquarters in Washington, DC, and country
offices.
The views of a selection of key stakeholders were
obtained using local consultants, one in each of
the case study countries, to understand the per-
ceptions of government officials, users, providers
of transport services, and interested parties such
as consultants and academics about the Bank’s as-
sistance and influence in the transport sector in
each of the countries concerned. Finally, a panel
of transport sector experts was convened to ad-
vise the study team and to review key evaluative
documents and the final study report.
 A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S

Figure A.2: IEG Transport Review: Inputs to the Evaluation

Special studies
PPARs World Bank
Impact studies Road funds and public-private balance in transport
IFC and MIGA transport infrastructure and services: staff
inputs Global overview interviews

IEG transport review

Country case
Literature review A Decade of studies and
World Bank research Action in Transport: stakeholder
and other reports interviews
An Evaluation
(Brazil, India, and
Tanzania)
Review of ESW/AAA

CEM: Country Economic Memoranda

Portfolio Database
PERs: Public Expenditure Reviews review World Bank
PRSPs: Poverty Reduction Strategy Papers including transport projects
statistical and statistics
CASs: Country Assistance Strategies
analysis

Note: AAA = analytical and advisory assistance; ESW = economic and sector work; IFC = International Finance Corporation; MIGA = Multilateral
Investment Guarantee Agency; PPAR = Project Performance Assessment Report.

Additional Tables and Figures

Figure A.3: IEG Ratings of Overall Project Outcome Transport Sector Board Projects
versus All Other Projects by Exit Year, 1992–2006

95
90 53
% Projects moderately

⽧
satisfactory or better

73
81 ⽧ 42
85 ⽧
62
80 73 67 䊱
⽧
489
75
84 54 䊱
70 ⽧ 䊱 725
78 䊱
65 732
䊱 629
636
60
Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06

⽧ Transport sector board projects 䊱 All other projects

Transport (excluding large borrowers)
Source: World Bank database.
Note: Numbers on figure indicate number of projects evaluated.

87
A DECADE OF ACTION IN TRANSPORT

Figure A.4: IEG Ratings of Institutional Development Transport Sector Board

Projects versus All Other Projects by Exit Year, 1992–2006

80
% Projects substantial

70 73
⽧
81
or better

⽧ 53
60 62
⽧
䊱
489
50 67
䊱 42
40 73 725
⽧ 䊱
636 䊱
54 732
30 䊱
629
78⽧
20 84
Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06

⽧ Transport sector board projects 䊱 All other projects

Transport (excluding large borrowers)
Source: World Bank database.
Note: Numbers on figure indicate number of projects evaluated.

Figure A.5: IEG Ratings of Sustainability of Project Outcomes Transport Sector

Board Projects versus All Other Projects by Exit Year, 1992–2006

80 53
⽧
75 73 42
⽧
81 䊱
70 ⽧
% Projects likely

62 489
65 䊱
or better

67
60 725
73
55 ⽧ 䊱

84 629 732
50
䊱
45 78 ⽧
䊱
636 54
40
Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06

⽧ Transport sector board projects 䊱 All other projects

Transport (excluding large borrowers)

Source: World Bank database.

Note: Numbers on figure indicate number of projects evaluated.

88
 A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S

Table A.1: IBRD/IDA: All Nontransport Commitments ($ billion):

Share of Top 5 and Top 10 Countries, Fiscal 1995–2000 and Fiscal 2001–06

Commitments Commitments
for Fiscal Share of for Fiscal Share of
Country 1995–2000 total (%) Country 2001–06 total (%)
China 10.9 9 Turkey 8.6 9
India 9.4 8 India 7.5 8
Argentina 7.9 7 Brazil 7.5 8
Russian Federation 7.8 7 Mexico 6.4 7
Mexico 7.1 6 Argentina 4.5 5
Korea, Republic of 7.1 6 Pakistan 3.7 4
Indonesia 6.3 5 China 3.2 3
Brazil 5.3 5 Colombia 3.2 3
Turkey 3.2 3 Vietnam 3.1 3
Thailand 3.1 3 Bangladesh 2.5 3
Total (all other countries) 48.7 41 Total (all other countries) 45.7 47
Total 116.8 100 Total 95.9 100

Share of top 5 countries 37 37

Share of top 10 countries 59 53

Figure A.6: IBRD/IDA Commitments and Share by Transport Mode

Railways Railways
9% 5%

Ports
Ports 2%
6%

Roads Roads
Aviation Aviation
73% 75%
0% 3%

General General
transport transport
12% 15%
Fiscal 1995–2000 Fiscal 2001–06
Source: World Bank data.

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Table A.2: IBRD/IDA Commitments for Transport on Per Capita Basis—

Selected Recipient Country Rankings (Fiscal 1995–2006)

Fiscal 1995–2000 Fiscal 2001–06

Rank Rank
Rank (top 10 Rank (top 10
$ per (per capita recipients of $ per (per capita recipients of
capita World Bank World Bank capita World Bank World Bank
fiscal transport transport fiscal transport transport
Country 1995–2000 commitments) commitments) Country 2001–06 commitments) commitments)
Croatia 47 1 Croatia 41 1
Uruguay 39 2 Uruguay 32 2
Argentina 32 3 6 Azerbaijan 30 3
Panama 30 4 Madagascar 19 4
Macedonia, FYR 27 5 Mozambique 16 5
Mauritius 24 6 Honduras 16 6
Albania 22 7 Lebanon 16 7
Lebanon 20 8 Nicaragua 15 8
Lesotho 18 9 Mongolia 14 9
Senegal 17 10 Argentina 13 10 5
Poland 11 24 10 Colombia 8 20 8
Brazil 10 26 2 Congo, Dem. Rep. of 7 27 9
Russian Federation 8 29 4 Vietnam 6 35 6
Mexico 6 40 7 Egypt, Arab Rep. 5 39 10
Vietnam 6 42 9 Mexico 4 46 7
Bangladesh 4 54 8 India 4 49 1
China 3 58 1 Brazil 4 53 4
Indonesia 3 59 6 Indonesia 3 55 3
India 1 71 3 China 2 63 2
Source: World Bank database.
Note: Excludes countries with population less than 1 million as of 2000; countries in bold also listed in table 3.1 in main text.

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 A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S

Figure A.7: Distribution of IBRD/IDA Transport Commitments by per Capita Income

(Fiscal 1995–2005)

High income (IBRD)

US$0.2b, 1%
Upper middle income
(IBRD) US$6.2b, 18%

Low income (IBRD/IDA)

US$13.0b, 38%

Lower middle income

(IBRD/IDA) US$14.7b, 43%

Low income: < US$825 Lower middle: US$826–3,255

Upper middle: US$3,256–10,065 High income: > US$10,066

Source: World Bank data.

Figure A.8: IEG Transport Ratings by Mode: Approval Year 1995–2006

100 16 32
164 4 11 58 285
80
Percentage

60

40

20

0
Highways Ports and Aviation Railways General Multiple All
waterways transport mode

Outcome: Moderately satisfactory or better Sustainability: Likely or better

Institutional Development Impact: Substantial or better

Source: IEG data.

Note: Numbers in figure represent number of projects rated.

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Figure A.9: Trends in IDA Share of Bank (IBRD and IDA) Commitments for Transport
(Fiscal 1995–2005)

5
16% 26% 33%
4
20% 32% 23% 34%
US$ billions

3 8% 37%
36%

2 32%

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Fiscal year

IBRD commitments for transport IDA commitments for transport

Source: World Bank data.

Note: Percentages indicate IDA’s share of total commitments.

Figure A.10: IBRD/IDA Commitments for Transport by Region (Fiscal 1995–2006)

28%
10

8 21% 20%
US$ billions

6 14%
13%
4

2 4%

0
East Asia Latin America South Sub-Saharan Europe and Middle East
and Pacific and the Asia Africa Central Asia and
Caribbean North Africa

Transport sector projects Other sector projects

Source: World Bank data.

Note: Percentages indicate other sectors’ share of total commitments.

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 A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S

Figure A.11: IBRD/IDA Commitments for Transport Per Capita by Region

(Fiscal 1995–2006)

12
9.9
10
US$ per capita

8
6.6
6 5.2 5.5
3.4 3.4 3.7
4 3.0 3.0 3.5
2.1
2 1.4

0
Sub-Saharan East Asia Europe and Latin America Middle East South
Africa and Pacific Central Asia and the and Asia
Caribbean North Africa

Fiscal 1995–2000 Fiscal 2001–06

Source: World Bank data.

Figure A.12: IEG Ratings for Outcome, Sustainability, and Institutional Development
for Transport Projects by Mode (Approval Year Fiscal 1995–2006)

100

80
Percentage

60

40

20

0
Outcome: Moderately Sustainability: Likely or better Institutional developement:
satisfactory or better Substantial or better

Roads and highways (164 projects) Ports (11 projects)

Railways (11 projects) General transportation (58 projects)
Source: IEG data.
Note: Aviation (four projects) had favorable ratings of 75% across all three rated attributes.

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Table A.3: Most Frequently Discussed Transport Issues in CAS Development Priorities

Transportation general Institutional reforms Intercity highways Rural access roads

Transport bottleneck elimination
Transportation infrastructure
and policy
Sustainability
Financing/regulation
ECA—upgrade to EU accession
standards
Building adequate and reliable
transportation network in
support of economic growth
Regional integration and
transport corridors
Easing of urban traffic congestion
Improved accessibility for poor in
cities
Need for institutional reforms
Capacity building
Restructure or concession
railways, public transport, and
ports
Establishment of road funds
Poor maintenance management
Border transit improvements
Reduce overstaffing
Poor quality and condition of
road network
Insufficient capacity (road
network)
In-time road rehabilitation
Lack of maintenance
Inadequate financing for road
maintenance
More focus on road safety
Roads supporting tourism
Private sector contracting
Rural mobility
Missing links between main
roads and rural roads
Roads, bridges, and drainage
improvements for all-weather
access
Funding for rural access roads

Source: World Bank data.

Note: CAS = country assistance strategy; ECA = Europe and Central Asia Region; EU = European Union.

94
 Table A.4: Number of Transport Projects by Lending Instrument (Fiscal 1995–2006)

Learning Poverty Sector

Adaptable Development Emergency Financial and Reduction Programmatic Sector Structural Specific Investment and Technical
Program Policy Recovery Intermediary Innovation Support Sectoral Adjustment Adjustment Investment Maintenance Assistance
Fiscal Year Loan Lending Loan Loan Loan Credit Loan Loan Loan Loan Loan Loan Total
1995 2 2 1 34 4 1 44
1996 1 1 1 2 40 3 2 50
1997 2 1 6 52 3 2 66
1998 1 6 2 3 2 3 46 4 1 68
1999 8 6 1 6 3 1 41 1 67
2000 10 3 3 1 1 1 25 44
2001 7 3 1 1 3 40 2 3 60
2002 7 8 1 3 25 1 2 47
2003 4 4 1 1 3 32 1 3 49
2004 7 3 2 1 2 1 39 4 59

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
2005 8 7 3 1 31 1 51
2006 4 4 1 1 1 1 22 1 2 37
Total Fiscal
1995–2006 56 4 46 8 12 2 9 12 25 427 24 17 642
Subtotal fiscal
1995–2000 19 0 20 4 12 0 1 10 14 238 15 6 339
Subtotal fiscal
2001–06 37 4 26 4 0 2 8 2 11 189 9 11 303
Source: World Bank database.
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Table A.5: Percentage of Transport Projects by Lending Instrument (Fiscal 1995–2006)

Learning Poverty Sector

Adaptable Development Emergency Financial and Reduction Programmatic Sector Structural Specific Investment and Technical
Program Policy Recovery Intermediary Innovation Support Sectoral Adjustment Adjustment Investment Maintenance Assistance
Loan Lending Loan Loan Loan Credit Loan Loan Loan Loan Loan Loan Total
Fiscal Year (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
1995 0.0 0.0 4.5 0.0 0.0 0.0 0.0 4.5 2.3 77.3 9.1 2.3 100
1996 0.0 0.0 2.0 2.0 0.0 0.0 0.0 2.0 4.0 80.0 6.0 4.0 100
1997 0.0 0.0 3.0 0.0 0.0 0.0 0.0 1.5 9.1 78.8 4.5 3.0 100
1998 1.5 0.0 8.8 2.9 4.4 0.0 0.0 2.9 4.4 67.6 5.9 1.5 100
1999 11.9 0.0 9.0 1.5 9.0 0.0 0.0 4.5 1.5 61.2 1.5 0.0 100
2000 22.7 0.0 6.8 0.0 6.8 0.0 2.3 2.3 2.3 56.8 0.0 0.0 100
2001 11.7 0.0 5.0 0.0 0.0 1.7 0.0 1.7 5.0 66.7 3.3 5.0 100
2002 14.9 0.0 17.0 0.0 0.0 0.0 2.1 0.0 6.4 53.2 2.1 4.3 100
2003 8.2 0.0 8.2 2.0 0.0 0.0 2.0 0.0 6.1 65.3 2.0 6.1 100
2004 11.9 0.0 5.1 3.4 0.0 1.7 3.4 0.0 1.7 66.1 6.8 0.0 100
2005 15.7 0.0 13.7 0.0 0.0 0.0 5.9 0.0 2.0 60.8 0.0 2.0 100
2006 10.8 10.8 2.7 2.7 0.0 0.0 2.7 2.7 0.0 59.5 2.7 5.4 100
Total fiscal
1995–2006 8.7 0.6 7.2 1.2 1.9 0.3 1.4 1.9 3.9 66.5 3.7 2.6 100
Subtotal fiscal
1995–2000 5.6 0.0 5.9 1.2 3.5 0.0 0.3 2.9 4.1 70.2 4.4 1.8 100.0
Subtotal fiscal
2001–06 12.2 1.3 8.6 1.3 0.0 0.7 2.6 0.7 3.6 62.4 3.0 3.6 100.0
Source: World Bank data.
 A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S

Figure A.13: Percentage of Transport Projects by Lending Instrument

(Fiscal 1995–2006)

70 66.5
60
50
Percentage

40
30
20 3.7
8.7 7.2
10 0.6 1.2 1.4 1.9 3.9 2.6
1.9 0.3
0
APL DPL ERL FIL LIL PRC PSL SAD SAL SIL SIM TAL

Source: World Bank data.

Note: APL = Adaptable Program Loan; DPL = Development Policy Lending; ERL = Emergency Recovery Loan; FIL = Financial Intermediary Loan; LIL = Learning and Innovation
Loan; PRC = Poverty Reduction Support Credit; PSL = Programmatic Sectoral Loan; SAD = Sector Adjustment Loan; SAL = Structural Adjustment Loan; SIL = Specific
Investment Loan; SIM = Sector Investment and Maintenance Loan; TAL = Technical Assistance Loan.

Table A.6: Number of Transport Projects (1995–2006)

Total fiscal Fiscal Fiscal

By mode 1995–2006 1995–2000 2001–06 Pipeline
Roads and highways 380 202 178 45
Ports, waterways, and shipping 29 19 10 3
Aviation 9 4 5 0
Railways 18 9 9 6
General transportation 120 64 56 20
Multimode 69 33 36 18
Total 625 331 294 92

Percentage share of transport projects (1995–2006)

Total fiscal Fiscal Fiscal
By mode 1995–2006 1995–2000 2001–06 Pipeline
Roads and highways 60.8 61.0 60.5 48.9
Ports, waterways, and shipping 4.6 5.7 3.4 3.3
Aviation 1.4 1.2 1.7 0.0
Railways 2.9 2.7 3.1 6.5
General transportation 19.2 19.3 19.0 21.7
Multimode 11.0 10.0 12.2 19.6
Total 100.0 100.0 100.0 100.0

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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
Region: Africa
P000117 C2924 TRANSPORT SECTOR INVESTMENT
PROGRAM Benin 1997 TR TATP 40 80 32 S L SU
P035645 C3073 Social Fund Benin 1998 SP TA 17 8 1 MS L SU
P057345 C3098 BORGOU PILOT RSP Benin 1998 RDV TA 4 24 1 S L SU
P035648 C3234 1ST DECEN. CITY MGMT. Benin 1999 UD TA 26 39 10 S L H
P061577 C3479 BJ—PERAC (Publ Expend. Adjust.
Credit) Benin 2001 PS TZ 10 5 1 MS L M
P000276 C2332 Transport Sector Adjustment
Program Burkina Faso 1992 TR TZ S L H
P038801 C2668 EMERG. ASSIST PR.EAP Burundi 1995 PSD TA 15 7 1 S UL NR
P035599 C2703 TRNSPT SECTOR TA Cameroon 1995 TR 10 0 0 S L SU
P000393 C2869 CM-Transport Sect Prj (FY96) Cameroon 1996 TR TA 61 86 52 S L SU
P054443 C3102 Cameroon—SAC III Cameroon 1998 EP TP 180 37 67 S L SU
P051059 L7020 CM-TD/CM Pipeline (FY00) Cameroon 2000 EMT TATPTW 53 12 6
P000438 C2864 PRIVATE/FINANCIAL SE Cape Verde 1996 PSD TP 11 2 0 S L SU
P050956 C3027 ECO. REFORMS SUPPORT Cape Verde 1998 EP TZ 30 7 2 S L SU
P075700 C3587 Structural Adjustment Credit Cape Verde 2002 EP TVTZ 15 34 5 HS L SU
P060092 C3305 CF-Fisc Consolidation Credit SAD
(FY00) Central African 2000 PSD TA 20 13 3 U UL NEG
P044975 CN030 SAC II Chad 1997 EP TZ 25 8 2 S L SU
P044305 L4558 TD-TD/CM Pipeline (FY00) Chad 2000 EMT TATPTW 40 12 5
P044824 C3011 KM-Social Fund SIL (FY98) Comoros 1998 SP TA 12 23 3 MS NEV M
P047250 C3468 KM-Infrast, Water & Env Prj (FY01) Comoros 2001 TR TA 11 54 6 NR NA NR
P000567 C2635 Economic Recovery Credit Congo 1994 EP MU HUL M
P075660 CH005 DRC Emergency Early Recovery
Project Congo, Democrat 2002 PSD TA 50 29 15 S L SU
P000568 C2775 PRIVATIZATION & CB Congo, Republic 1996 PSD TZ 9 15 1 MU NEV M
P037575 C2704 MUNICIPAL SUPPORT Côte d’Ivoire 1995 UD TA 40 29 12 U HU M
 P001165 ERC Côte d’Ivoire 1995 EP TP 100 33 33
P001212 C2843 PRIVATE SECTOR DEVEL Côte d’Ivoire 1996 PSD TP 180 11 20 MS L M
P040115 C2786 RAILWAYS REHAB Côte d’Ivoire 1996 TR TW 20 100 20 S L H
P001194 CN022 CI-IVC PNGTER Rural Land (FY97) Côte d’Ivoire 1997 ENV TA 41 16 7
P001177 C3100 CI-Transp Sec Adj (FY98) Côte d’Ivoire 1998 TR TATPTZ 180 59 106
P044651 C2945 ER ROAD SECTOR ENGINEERING
PROJECT Eritrea 1997 TR TA 6 31 2 S L SU
P044674 C3434,CH051 ER-Emerg Reconstr ERL (FY01) Eritrea 2001 FSP TA 90 20 18
P000755 C3032 ET-Road Sec. Dev. Program Support
Proj. Ethiopia 1998 TR TA 309 92 284 S HL SU
P035595 L3777 TRANSPORT SECTOR TA Gabon 1995 TR TZ 5 35 2 S L SU
P035626 L4387 PILOT COM. INFRA. UP Gabon 1999 UD TA 5 64 3 MS L SU
P000957 C2858 gh High Sector Invest Prog Ghana 1996 TR TA 100 85 85 MS L SU
P000973 C2836 GH-Urban Env Sanitation 1 (BD FY06) Ghana 1996 UD TA 71 5 4 MS UL M
P041150 CN020 Ghana:VILLAGE INFRASTRUCTURE Ghana 1997 RDV TZ 30 22 7 S L SU
P040557 C3228 GH -ERSO II Ghana 1999 EP TZ 178 12 21 U UL NEG
P050624 C3330 URBAN 5 Ghana 2000 UD TZ 11 23 2 S NEV M
P000961 C2555 Agriculture Sector Investment
Project Ghana 1994 RDV U HUL NEG
P049690 C3021 PUB.EXP.MNG.ADJ.CRD- ICR Guinea 1998 PS TA 70 4 3 U UL M

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P001074 C3196 Third Urban Development Project
(APL) Guinea 1999 UD TA 18 40 7 S L SU
P035915 C2748 TRANSPORT AND URBAN
INFRASTRUCTURE Guinea-Bissau 1995 UD TATP 22 62 14 HU UL NEG
P001334 C2884 SAC I Kenya 1996 EP TZ 90 22 20 U UNC NEG
P035691 C2812 KE—NAIROBI MOMBASA ROAD Kenya 1996 TR TA 50 93 47 S L SU
P001319 C2811 KE-Urb Transp (FY96) Kenya 1996 TR TA 115 74 85 MU L NEG
P056595 C3120 EL NINO EMERGENCY PROJECT Kenya 1999 UD TA 40 63 25 S L M
P069501 C3406 Kenya Economic & Public Sector
Reform Kenya 2001 PS TZ 150 15 23 U L M
P001403 C2857 Lesotho ROAD REHAB. & MAINT Lesotho 1996 TR TA 40 76 30 MS NEV M
P058050 C3308 Community Dev. Support Lesotho 2000 SP TZ 5 8 0 U NEV NEG
P035669 C2778 SOCIAL FUND 2 Madagascar 1996 SP TA 40 20 8 S UL M
P001582 C2937,CN012 SAC I Madagascar 1997 EP TV 70 17 12 S UNC M
99

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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P048697 C2968 MG-Urban Infrastructure Project Madagascar 1997 UD TZ 35 36 13 S L SU
P057378 C3218 SAC II Madagascar 1999 EP TV 100 8 8 MS L SU
P064305 C3180 MG-Third Social Fund Prj (FY99) Madagascar 1999 SP TZ 15 20 3 MU NEV M
P052208 C3364 MG-Transp Sec Reform & Rehab
(FY00) Madagascar 2000 TR TATPTV 65 44 29 S L SU
P080345 C3716 MG-Emerg Econ Recovery Crdt (FY03) Madagascar 2003 PS TZ 50 30 15 S L M
P034489 C2696 MALAWI RAILWAYS REST Malawi 1995 TR TPTW 16 100 16 S L SU
P001750 CN004 ML-Urb Dev & Decentr (FY97) Mali 1997 UD TZ 80 42 34 MU UL M
P035617 CN037 Mali:GRASSROOTS HUN/POVT Mali 1998 SDV TA 22 16 3 MS NEV M
P083799 ML-Econ. Policy & Public Fin. Mgt
(FY06) Mali 2006 EP TA 25 10 3
P001866 C2726 FINANCIAL & PRIVATE Mauritania 1995 PSD TP 30 6 2 MS L M
P034106 C2835 URBAN INFRASTRUCTURE
& PILOT DEC. Mauritania 1996 UD TA 14 20 3 S L SU
P001875 C2965 Mauri:RAINFED NAT RES MGT Mauritania 1997 RDV TA 18 4 1 S L SU
P044711 C3272 MR-Iirrigated Agr Integr Dev APL
(FY00) Mauritania 2000 RDV TA 38 4 2 MS L SU
P001926 L3908,L3909 PORT DEV. & ENV PROT Mauritius 1995 TR TATP 31 95 29 HS L SU
P075070 L7115 LKD Mauritius—PERL Mauritius 2002 PS TZ 40 13 5 MS L SU
P035922 CN010 ERC III Mozambique 1997 EP TW 100 7 7 MS L SU
P070432 C3336 Flood Emergency Recovery Project Mozambique 2000 PSD TZ 30 20 6 S NEV NEG
P049878 C3709 MZ-EMPSO Mozambique 2003 EP TZ 120 25 30 MS L M
P001770 C2065 Beira Transport Corridor Mozambique 1990 TR TATP S L SU
P001790 C2374 First Road and Coastal Shipping
Project Mozambique 1992 FS TATP S L SU
P001802 C2454 Maputo Corridor Revitalization
Project Mozambique 1993 TR TP S L H
P001777 C2628 Second Economic Recovery
Credit Mozambique 1994 FS MS L SU
P001974 C2939 PUBLIC SECTOR ADJ. Niger 1997 PS TZ 30 11 3 MS UL M
 P035608 C3026 NE TRANSP. INFRA. REHAB Niger 1998 TR TA 28 99 28 MU UL SU
P051931 C3138 Community Reintegration (CRDP) Rwanda 1999 SP TZ 5 20 1 MS UL SU
P002364 C2681 P.S. ADJUSTMENT & CO Senegal 1995 EP TP 40 13 5 S L SU
P044383 CN024 URBAN TRANSPORT REFORM TA
PROJECT Senegal 1997 TR TZ 7 55 4 MS L SU
P002365 C3006 URB DEVT & DECEN PRO Senegal 1998 UD TZ 75 16 12 HS L H
P057996 C3315 SN-Natl Rural Infrastr (FY00) Senegal 2000 SDV TZ 29 20 6
P002383 L3551 Environment and Transport
Project Seychelles 1993 TR TA MU L M
P002420 C2895 SL-Transport Sector SIM (FY96) Sierra Leone 1996 TR TATPTV 35 93 33 MS NEV M
P002407 C2451 Roads Rehabilitation and
Maintenance Project Sierra Leone 1993 TR TA MU L SU
P002433 C2511 Freetown Infrastructure
Rehabilitation Project Sierra Leone 1993 UD TA MS UL M
P002669 L3807 SZ-Urb Dev (FY95) Swaziland 1995 UD TA 29 14 4 S L M
P002758 C2867 TZ—Urban Sector Rehabilitation Tanzania 1996 UD TA 105 30 32 HS L SU
P002821 C2967 SAC I Tanzania 1997 EP TP 125 22 28 S L SU
P002822 C3379 TANZANIA PSAC I Tanzania 2000 PS TZ 190 13 25 S L SU
P002784 C2095 Second Port Modernization
Project Tanzania 1990 TR TP S L SU

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P002757 C2267 Railway Restructuring Project Tanzania 1991 TR TW U NEV SU
P002875 C2989 ROAD TRANSPORT PROJECT Togo 1998 TR TA 50 93 47 MS UL SU
P052263 C3195 Pilot Social Fund Togo 1999 SP TA 5 8 0 U UL M
P057007 C3064 UG EL NINO EMERG RD REP Uganda 1998 TR TA 28 100 28 S L M
P059223 C3203 UG-Nakivubo Channel Rehab SIl
(FY99) Uganda 1999 UD TA 22 6 1 S L M
P050438 C3510 UG-PRSC 1 (FY01) Uganda 2001 PS TA 150 8 12 MS NEV M
P003236 C2993 ROAD SEC. INVESTMENT PROG.
SUPPORT PROJ. Zambia 1998 TR TATZ 70 90 63 S L SU
P035076 C3042 ZM-Power Rehab SIL (FY98) Zambia 1998 EMT TA 75 1 1
P063584 C3355 ZM-ZAMSIF (FY00) Zambia 2000 SP TA 65 18 12
P003227 C3433 ZM-Railways Restructing SIL (FY01) Zambia 2001 TR TW 27 25 7 S NEV SU
P003246 C2515 Transport Engineering and
Technical Assistance Project Zambia 1993 TR TZ S L SU
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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P003222 C2577 Economic and Social Adjustment
Program Zambia 1994 EP MS UNC M
P045029 CN019 PILOT RDC Zimbabwe 1997 UD TA 12 34 4 U UL M
P003318 C3083 PARK REHAB & CONSERV Zimbabwe 1998 ENV TA 63 23 14 NR NA NR
Region: East Asia and Pacific
P037088 C2739 KH-SOCIAL FUND (Project closed) Cambodia 1995 SP TA 20 10 2 S L SU
P058841 C3216 KH-NORTHEAST VILLAGE Cambodia 1999 RDV TA 5 22 1 S UL M
P050601 C3179 KH-SOCIAL FUND II Cambodia 1999 SP TA 25 20 5
P073394 C3472 KH-Flood Emergency Rehabilitation
Proj Cambodia 2001 RDV TA 35 50 18 S L SU
P003493 L3910 Inland Waterways China 1995 TR TP 210 97 204 S L SU
P003571 L3897 CN-7TH RAILWAYS China 1995 TR TW 400 99 396 MU L M
P003612 L3787 XINJIANG HIGHWAY PROJECT China 1995 TR TA 150 99 149 S HL SU
P003569 L3929 Shanghai-Zhejiang Hwy China 1996 TR TA 260 97 252 S L SU
P003649 C2834 CN -SHANXI POVERTY ALLEV China 1996 RDV TA 100 10 10 MS HL SU
P003652 L3986 CN-2nd Shaanxi Prov Hwy China 1996 TR TA 210 84 176 S L SU
P040513 L4027 Second Henan Provincial Highway
Project China 1996 TR TA 210 99 208 S L SU
P003590 CN028,L4187 CN-QINBA MOUNTAINS REDUCTION China 1997 RDV TZ 180 3 5 S HL SU
P003643 L4099 CN-Second Xinjiang Highway Project China 1997 TR TA 300 98 294 S L SU
P003654 L4124 CN-Nat Hwy2/Hunan-Guangdong China 1997 TR TA 400 100 400 S L SU
P036949 L4327 CN-Nat Hwy3-Hubei China 1998 TR TA 250 99 248 S HL SU
P049700 L4354 Irrigated Agriculture Intensification II China 1998 RDV TA 300 7 21 HS L SU
P063123 C3169,L4438 YANGTZE FLOOD EMERGENCY
REHABILITATION China 1999 RDV TA 80 51 41 HS HL SU
P041890 L4453 CN-Liaoning Urban Transport China 1999 TR TATZ 150 96 144
P003653 L4444 CN-Container Transport China 1999 TR TP 71 100 71 MS L SU
P050036 L4421 CN-Anhui Provincial Highway
Project China 1999 TR TA 200 98 196 S HL SU
 P003504 L3748 Hebei/Henan National China 1994 TR TA S L SU
P003951 L3854 ID-KALIMANTAN UDP Indonesia 1995 UD TA 136 20 27 S NEV M
P034891 L3888 VILLAGE INFRASTRUCTU Indonesia 1995 TR TA 73 25 18 HS L SU
P004008 L3984 ID—NUSA TENGGARA DEV. Indonesia 1996 RDV TA 27 20 5 MU UL M
P004011 L4007 ID—SULAWESI AGRI AREA Indonesia 1996 RDV TA 27 29 8 MU UL M
P004016 L4054 ID-Strategic Urban Rds Indonesia 1996 TR TA 87 81 70 MS L M
P039312 L4017 IND-EAST JAVA UDP II Indonesia 1996 UD TA 117 29 34 MS UL M
P004026 L4106 ID-Railway Efficiency Indonesia 1997 TR TW 105 100 105 U UL M
P036047 L4155 ID-BALI URBAN INFRA. Indonesia 1997 UD TA 110 15 17 MS L M
P036053 L4105 ID-SUL2UDP Indonesia 1997 UD TA 155 20 31 U UL NEG
P040521 L4100 VILLAGE INFRASTRUCTURE II Indonesia 1997 TR TA 140 21 29 HS L SU
P037095 L4306 MALUKU REG. DEV Indonesia 1998 RDV TP 16 9 1 NA NA NAPP
P045337 C3453,L4330 ID-KECAMATAN DEV FUND Indonesia 1998 PS TZ 225 21 47 S L SU
P003993 L4307 ID-SUMATRA REG’L RDS Indonesia 1998 TR TA 234 91 213
P040061 L4290 ID—BENGKULU REGIONAL
DEVELOPMENT Indonesia 1998 RDV TA 21 10 2
P003890 L3749 Semarang Surakarta Urban
Development Project Indonesia 1994 UD MU UL M
P004173 L3793 KR-Ports Dev & Environment Korea, Republic of 1995 TR TP 100 92 92 S L M

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P004175 L3828 KR-PUSAN URB TRANSPORT Korea, Republic of 1995 TR TZ 100 90 90 MS UL SU
P004210 C2943 LA-Third Highway Improvement
Project Lao PDR 1997 TR TA 48 98 47 HS L SU
P064821 C3481 LA-Road Maintenance Lao PDR 2001 TR TA 25 97 24 S HL SU
P041741 C2947 BANKING & ENT-BESAC Mongolia 1997 FSP TZ 10 9 1 U UL M
P055446 L4316 EMERGENCY EL NINO DROUGHT
RESPONSE Papua New Guinea 1998 RDV TZ 5 48 2 U L M
P037079 L4109 PH—AGRARIAN REFORM COMM Philippines 1997 RDV TA 50 35 18 S L SU
P040981 L4111 PH-SECOND SUBIC BAY Philippines 1997 PSD TATP 60 40 24 S L SU
P051386 L4300 SZOPAD SOCIAL FUND Philippines 1998 SP TA 10 22 2 S NEV M
P058842 L4522 MINDANAO RURAL DEVELOPMENT
PROJECT Philippines 2000 RDV TA 28 48 13 S NEV SU
P052293 C3193 WS-Infrastructure Asset
Management Samoa 1999 TR TATV 14 66 10 S L H
P004800 L3968 TH-Highways V Thailand 1996 TR TA 150 98 147 S L SU
103

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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P004842 CN013 VN-2nd Hwy Rehab Vietnam 1997 TR TA 196 93 182 MS NEV M
P039021 C2929 VN-Rural Transport Vietnam 1997 TR TA 55 98 54 MS L M
P004843 C3000 VN-INLAND WATERWAYS Vietnam 1998 TR TP 73 92 67
P004833 C3125 VN-URBAN TRANSPT IMPRVT Vietnam 1999 TR TATZ 43 80 34
P004832 C2549 Highway Rehab Vietnam 1994 TR TA S L M
Region: Europe and Central Asia
P008267 C2732 RURAL ROADS Albania 1995 TR TA 15 74 11 S L H
P008273 C2680 RURAL DEVELOPMENT Albania 1995 RDV TA 6 10 1 S L H
P036060 C2888 NATL ROADS Albania 1996 TR TA 25 100 25 MS L M
P040818 C3068 DURRES PORT Albania 1998 TR TP 17 97 16 MS L SU
P040975 C3066 LAND DEVT Albania 1998 UD TA 10 17 2 S L M
P051309 C3164 COMMUNITY WORKS Albania 1999 SP TA 9 20 2 S L SU
P068853 C3303 EMG ROAD REPAIR Albania 2000 TR TA 14 79 11 S UL M
P070078 C3427 TRADE & TRANS FACIL IN SE EUR Albania 2001 TR TA 8 25 2 MS L M
P035765 C2776 HIGHWAY Armenia 1996 TR TA 16 91 15 HS L SU
P044829 C3375 TRANSPORT Armenia 2000 TR TATW 40 94 38 S L M
P055155 C3107 URG ENV INVST Azerbaijan 1998 ENV TA 20 6 1 MU NEV M
P044393 C2905 EMG LANDMINE CLEARANCE Bosnia and
Herzegovina 1997 TR 8 0 0 HU HU NEG
P045484 CN032 EMG TRNSPT RECON 2 Bosnia and
Herzegovina 1998 TR TA 39 99 39 S L M
P056192 C3191 LOCAL DEVT Bosnia and
Herzegovina 1999 UD TZ 15 28 4 S L M
P070079 C3466 TRADE & TRANS FACIL IN SE EUR Bosnia and
Herzegovina 2001 TR 11 0 0 S L SU
P008315 L3922 RAILWAY REHAB Bulgaria 1996 TR TW 95 100 95 MS NEV SU
P070086 L4553 TRADE & TRANS FACIL IN SE EUR Bulgaria 2000 TR 7 0 0 S L SU
P067051 L7158 PAL Bulgaria 2003 PSD TW 150 5 8 S L SU
P008329 L3869 HIGHWAY SECTOR Croatia 1995 TR TA 80 91 73 U L M
 P044457 L4104 EMG TRANS/MINE CLR Croatia 1997 TR TATPTW 102 70 71 S L SU
P039161 L4433 RAILWAY MOD & RESTRCT’G Croatia 1999 TR TW 101 65 66 MS L M
P070088 L4582 TRADE & TRANS FACIL IN SE EUR Croatia 2001 TR 14 0 0 MS L SU
P082278 L7330 PAL Croatia 2006 EP TW 185 20 37
P008328 L3760 Emergency Reconstruction
Project Croatia 1994 UD TA MS L M
P035775 L7008 TRANSPORT Estonia 2000 TR TA 25 95 24 S L SU
P008417 C2658 MUN INFRA REH Georgia 1995 UD TZ 18 26 5 S L M
P039892 C2809 TRANSPORT Georgia 1996 TR TATW 12 75 9 HS L SU
P050910 C2976 MUN DEVT Georgia 1998 UD TZ 21 29 6 S L M
P056514 C3129 TRANS MIN RESTRUCT Georgia 1999 TR 2 0 0 S L SU
P040556 C3357 ROADS Georgia 2000 TR TA 40 99 40
P008494 L3903 BUDAPEST URBAN TRANS Hungary 1995 TR TZ 38 100 38 S L SU
P008449 L3032 Second Transport Project Hungary 1989 TR S L M
P008465 L3549 Roads Project Hungary 1993 TR TA MS UL M
P008511 L3725 Urban Transport Kazakhstan 1994 TR MS UNC SU
P050719 C3410 KYRGYZ URBAN TRANSPORT
PROJECT Kyrgyz Republic 2001 TR TA 22 99 22
P034584 L3964 MUN SERVICES DEVT Latvia 1996 UD TZ 27 61 17 MS UL M
P008532 L4145 HIGHWAY Latvia 1997 TR TA 20 99 20 HS HL H

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P066153 L7007 PSAL Latvia 2000 PS TZ 40 6 2 S L SU
P008551 L4084 HIGHWAY Lithuania 1997 TR TA 19 99 19 S L SU
P035802 L4481 MUNI DEVT Lithuania 1999 UD TZ 20 25 5 U L M
P008407 L3868 TRANSIT FACILITATION Macedonia, FYR 1995 TR TA 24 93 22 HS L SU
P050589 L4439 TRANSPORT Macedonia, FYR 1999 TR TATW 32 100 32 MS L M
P070089 C3402 TRADE & TRANS FACIL IN SE EUR Macedonia, FYR 2001 TR 9 0 0
P044840 C3170 SIF Moldova 1999 SP TA 15 22 3 S L SU
P036061 L4080 PORT ACCESS & MGMT Poland 1997 TR TATP 67 98 66 S L SU
P035082 L4208,L4209 MUNI FIN Poland 1998 FSP TA 22 25 6 U L M
P053796 L4264 FLOOD EMERGENCY Poland 1998 UD TA 200 12 24
P058202 L7013 RUR DEVT Poland 2000 RDV TA 120 23 28 S L SU
P040795 L7054 RAIL RESTRCT (PKP) Poland 2001 TR 101 0 0
P036013 L3976 RAILWAY REHABILITATION Romania 1996 TR TW 120 100 120 HS HL H
P065041 L4560 TRADE & TRANS FACIL IN SE EUR Romania 2000 TR 17 0 0 MS HL SU
105

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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P008791 L4752 PAL Romania 2005 EP TZ 150 10 15 S L SU
P008771 L3593 Transport Project Romania 1993 TR HS L SU
P008808 L3706 Highway Rehabilitation
And Maintenance Russian Federation 1994 TR MU NEV M
P008806 L3885 URBAN TRANSPORT Russian Federation 1995 TR TZ 329 97 319 S L M
P008827 L3850 HOUSING Russian Federation 1995 UD TA 400 17 68 MU UL M
P035764 L3990 BRIDGE REHABILITATION Russian Federation 1996 TR TA 350 93 326 MS L M
P042720 L4144 ST PETERSBURG REHAB Russian Federation 1997 UD TA 31 14 4 MU NEV M
P050491 L4261 SAL 2 Russian Federation 1998 EP TP 800 13 104 U L M
P042722 L4427 HWY REHAB & MAINT 2 Russian Federation 1999 TR TA 400 85 340 NR NR NR
P053386 C3037 POST CNFLT RECONSTRUCTION Tajikistan 1998 TR TA 10 52 5 S UL M
P059055 C3123 EMG FLOOD ASST Tajikistan 1999 UD TA 5 68 3 U UL NEG
P038091 L4048,L4049 ROAD IMPRVMT & TRAFFIC
SAFETY Turkey 1996 TR TA 250 94 235 MS L M
P058877 L4388 EMGY FLOOD RECOVERY Turkey 1999 UD TA 369 6 22 S L M
P034083 L4170 URBAN TRANSPORT Turkmenistan 1997 TR TZ 34 68 23 MU UL NEG
P034581 L3985 HOUSING Ukraine 1996 UD TA 17 10 2 NR NR NR
P050508 L4547 URBAN TRANSPORT Uzbekistan 2000 TR TZ 29 98 28
Region: Latin America and the Caribbean
P006018 L3877 AR PROV DEVT II Argentina 1995 PS TA 225 20 45
P006060 L3860 AR MUNIC DEVT II Argentina 1995 UD TZ 210 44 92 S L M
P035495 L3957 SOCIAL PROTECTION Argentina 1996 SP TA 152 4 6 S L SU
P005980 L4093 AR PROV ROADS Argentina 1997 TR TA 300 97 291
P055935 L4273 EL NINO EMERGENCY
FLOOD PROJECT Argentina 1998 WS TZ 42 44 18 S UL M
P052590 L4295 AR NAT HWY REHAB&MAINT Argentina 1998 TR TA 450 97 437
P006058 L4398 AR-Social Protection 4 Argentina 1999 SP TA 91 15 14
P044447 L4578 AR Catamarca Provincial Reform Argentina 2001 PS TA 71 8 6
P069913 L4634 AR Santa Fe Provincial Reform Argentina 2002 PS TA 330 7 23
 P039292 L4142 BZ- SOCIAL INVEST. FUND Belize 1997 SP TA 7 15 1 MU L M
P040150 L4575 BZ ROADS AND MUNICIPAL
DRAINAGE PROJECT Belize 2001 TR TA 13 50 7 S UL M
P037005 C2647 REGULATORY REF & CAP Bolivia 1995 PS TV 15 15 2 S L SU
P006202 C2772 RURAL COMMUNITIES DE Bolivia 1996 RDV TA 15 9 1 S L SU
P055974 C3057 BO EL NINO EMERGENCY Bolivia 1998 TR TA 25 19 5 S UL M
P057030 C3143 BO REG REFORM ADJ CREDI Bolivia 1999 PSD TZ 40 8 3 S L SU
P055230 C3235 BO ABAPO-CAMIRI HIGHWAY Bolivia 1999 TR TA 88 99 87
P006564 L3916 BR BELO H M.TSP Brazil 1995 TR TATW 99 93 92 MS L SU
P035717 L3917 RURAL POV. (BAHIA) Brazil 1995 RDV TA 105 30 32 S L SU
P038882 L3915 BR RECIFE M.TSP Brazil 1995 TR TATWTZ 102 98 100 MS L SU
P038884 L3918 RURAL POV.- CEARA Brazil 1995 RDV TA 70 23 16 HS L SU
P038885 L3919 RURAL POV.-SERGIPE Brazil 1995 RDV TA 36 23 8 S L SU
P040028 L4046 RAILWAYS RESTRUCTURG Brazil 1996 TR TW 350 99 347 S L SU
P037828 L4060 BR (PR)R.POVERTY Brazil 1996 RDV TZ 175 22 39
P006562 L4140 Bahia Municipal Inf. Dev’t. and
Mgm’t. Brazil 1997 UD TZ 100 13 13 S L SU
P038896 L4120 R.POVERTY(RGN) Brazil 1997 RDV TA 24 22 5 HS L SU
P042566 L4122 R.POVERTY(PE) Brazil 1997 RDV TA 39 22 9 S L SU

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P043871 L4121 (PIAUI)R.POVERTY Brazil 1997 RDV TA 30 23 7 S L SU
P039196 L4139 BR RGS ST.REF Brazil 1997 PS TA 125 9 11 MS L M
P048870 L4189 BR MT STATE PRIV. Brazil 1997 PSD TA 45 16 7 S L SU
P006532 L4188 BR FED HWY DECENTR Brazil 1997 TR TA 300 92 276
P034578 L4165 BR RGS Highway MGT Brazil 1997 TR TA 70 77 54
P006559 L4312 BR (BF-R)SP.TSP Brazil 1998 TR TZ 45 86 39 HS HL SU
P040033 L4318 MG STATE PRIV. Brazil 1998 PSD TA 170 10 17 NR NR NR
P051701 L4252 BR MARANHAO R.POVERTY Brazil 1998 RDV TA 80 20 16 S L SU
P039197 L4211 BR RJ ST.PRIV. Brazil 1998 PS TZ 250 100 250 S L M
P050875 L4626 BR Ceara Rural Poverty Reduction
Project Brazil 2001 RDV TA 38 25 9
P057649 L4623 BR Bahia Rural Poverty Reduction
Project Brazil 2001 RDV TA 54 25 14 S L SU
P080827 L7218 BR Loan for Sust. and Equitable
Growth Brazil 2004 PSD TZ 505 25 126 S L SU
107

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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P006378 L3547,L3548 Santa Catarina State Highway
Management Project Brazil 1993 TR TA S L SU
P006661 L3833 CL THIRD RD SCTR Chile 1995 TR TA 120 100 120 S L SU
P006676 L3974 CL SECANO AG DEV I Chile 1996 RDV TA 15 10 2 S L M
P082412 L7315 CL -Santiago Urban Transport Adj Chile 2006 TR TZ 30 100 30
P006872 L4021 CO Urban Transport Colombia 1996 TR TATZ 65 91 59 HS HL H
P006861 L4345 CO URBAN INFRASTRUCTURE Colombia 1998 UD TZ 75 20 15 S L SU
P046031 L4371 CO MAGDALENA MEDIO Colombia 1998 SDV TA 5 10 1 HS L SU
P039082 L4370 TOLL-ROAD CONCESSION Colombia 1999 TR TA 137 100 137 U UL NEG
P081397 L7309 CO Prog Dev Policy Ln for Sust.
Dev Colombia 2005 ENV TZ 150 10 15
P006856 L3157 Second Rural Roads Sector
Project Colombia 1990 TR TA S UNC M
P006873 L3453 Third National Highway Sector
Project Colombia 1992 TR TA S UNC SU
P077680 C3610,L7099 Emergency Recovery Project Dominican Repub 2002 UD TPTV 3 60 2 S L M
P078841 C3851 DM ERSO Dominican Repub 2004 PO TP 3 10 0 S L SU
P035722 L4127 DO NATIONAL HWY. PROJ. Dominican Repub 1997 TR TA 75 91 68 MS UL M
P063201 0 DO Hurricane Georges Emergency
Recovery Dominican Repub 1999 PSD TA 111 20 22 S L M
P040198 L4407 GT FIS II Guatemala 1999 SP TA 50 12 6 MS NEV M
P054462 L4432 GT LAND FUND (APL) Guatemala 1999 RDV TA 23 13 3
P007318 C2691 RD MAINT & RHB Haiti 1995 TR TA 50 90 45 HU UL NEG
P031828 C2670 EMERGENCY ECONOMIC R Haiti 1995 PSD TZ 40 20 8 HS L SU
P089873 C4029,CH142 HT Economic Governance Reform
Adj. Ope. Haiti 2005 EP TZ 61 12 7
P007388 C2458 Transport Sector Rehabilitation
Project Honduras 1993 TR TATV 65 83 54 S L SU
P007387 C2816 HN PUB SEC MOD SAC Honduras 1996 PS TV 55 12 7 MU L SU
P064083 C3159 HO HURRICANE EMERGENCY Honduras 1999 PSD TZ 200 20 40 S L NEG
 P064895 C3443 HN FIFTH SOCIAL INVESTMENT
FUND PROJECT Honduras 2001 SP TA 60 25 15
P074758 C3941 HN PRSC Honduras 2004 PO TZ 59 10 6 S NEV SU
P039029 L4088 JM- SOC. INVEST. FUND Jamaica 1997 SP TA 20 20 4 S UL M
P007702 L3790 SECOND DECENTRALIZATION Mexico 1995 PSD TA 500 33 165 S L SU
P040685 L3937 INFRA. PRIVATZTN TA Mexico 1996 PSD TZ 30 30 9 S L SU
P043163 L4206 FEDERAL ROADS MODZTN Mexico 1997 TR TA 475 89 423 NR NR NR
P064887 L7038 MX DISASTER MANAGEMENT (ERL) Mexico 2001 ENV TZ 404 23 93 HU HU NEG
P070479 L7043 MX Edo.de Mexico Structural
Adjustm Loan Mexico 2001 PS TA 505 10 51 MS L M
P065779 L7042 MX FEDERAL HIGHWAY
MAINTENANCE PROJ. Mexico 2001 TR TA 218 98 214
P007694 L3543 Transport Air Quality
Management for Mexico City
Metro Area Mexico 1993 TR S L SU
P007723 L3628 Highway Rehabilitation and
Safety Project Mexico 1993 TR TA S NEV M
P007788 C2871 ROAD REHAB & MAINT Nicaragua 1996 TR TA 25 84 21 HS L SU
P007790 C2918 NI RURAL MUNICIPALITIES Nicaragua 1997 RDV TZ 30 19 6 MS NEV SU
P053705 C3085 NI TRANSPORT II Nicaragua 1998 TR TA 47 82 39 HS L SU

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
P064084 C3158 NI HURRICANE EMERGENCY Nicaragua 1999 PSD TZ 50 20 10 S L NEG
P007837 L4191 PA—FIS Panama 1997 SP TA 28 10 3 MU NEV M
P053706 L4393 SECOND ROADS REHAB Panama 1999 TR TA 85 97 82 NR NR NR
P037047 L3962 RURAL RDS. REHAB & M Peru 1996 TR TA 90 96 86 HS L SU
P040125 L4068 PE-FONCODES II Peru 1997 SP TA 150 2 3 S L M
P054667 L4250 EL NINO EMERGENCY LN Peru 1998 TR 150 0 0 MU L SU
P082871 L7203 PE Program. Decent. & Competitiveness Peru 2004 PS TP 150 10 15 S L SU
P083949 L7267 PE PROGRAMATIC REFORM FOR
GROWTH II Peru 2005 PSD TZ 100 25 25
P062668 L4418 St. Kitts & Nevis—Disaster
Management St. Kitts and Nevis 1999 PSD TZ 9 20 2 S L SU
P077684 L7101 Emergency Recovery Project St. Kitts and Nevis 2002 UD TPTV 4 59 3
P070430 C3151,L4419 Saint Lucia—Disaster
Management St. Lucia 1999 PSD TZ 6 20 1 S L SU
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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P054939 C3277,L4508 LC- POVERTY REDUCTION FUND St. Lucia 2000 SP TA 3 10 0 MS NEV M
P077687 C3612,L7102 Emergency Recovery Project St. Lucia 2002 UD TPTV 6 56 4
P076822 C3613,L7103 Emergency Recovery Project St. Vincent 2002 UD TP 3 100 3
P039203 L4204 UY FOREST PROD.TSP Uruguay 1997 TR TATPTW 76 92 70
P049267 L4395 UY TRANSPORT II Uruguay 1999 TR TA 65 94 61 S L SU
Region: Middle East and North Africa
P004907 L3839 DZ-HIGHWAYS VI Algeria 1995 TR TA 130 71 92 U UL M
P038695 L3813 DZ-MASCARA EMERG.RECONS Algeria 1995 UD TA 51 14 7 S L M
P004978 L4006 SOCIAL SAFETY I Algeria 1996 SP TA 50 22 11 S L SU
P043724 L4143 DZ-RURAL EMPLOYMENT Algeria 1997 RDV TA 89 4 4 S L SU
P042940 L4361 DZ-LOW INCOME HOUSING Algeria 1998 UD TA 150 25 38 U UL NEG
P069947 L7023 DZ-TEERP(Temouchent Emerg.
Earthquake) Algeria 2000 UD TA 83 2 2
P069930 C3391 DJ-INTL. ROAD CORRIDOR REHAB.
PROJECT Djibouti 2000 TR TA 15 91 14 S L M
P057704 C3074 PORT SECTOR REFORM Egypt, Arab Rep of 1998 TR 2 0 0 NR NR NR
P074075 L7161 EG—Second Matruh Resource
Mgmt. Proj. Egypt, Arab Rep of 2003 RDV TA 12 10 1
P049581 L4215 COMMUNITY INFRA. DEV. Jordan 1998 UD TA 30 24 7 S L SU
P035997 L4214 JO-SECOND TOURISM DEV. Jordan 1998 UD TA 32 45 14 MS L M
P045676 L4482 Jordan—ERDL III Jordan 1999 EP TZ 120 11 13 MS L SU
P034037 L4092 LB: AGRI. INFRA. DEVEL. Lebanon 1997 RDV TA 31 32 10 S L M
P038674 L4065 LB-NATIONAL ROADS Lebanon 1997 TR TA 42 91 38 MS UL M
P005489 L3901 MA-SECONDARY ROADS Morocco 1995 TR TA 58 87 50 S L M
P041303 L3935 EMERG. DROUGHT RECOV Morocco 1996 RDV TA 100 23 23 HS L SU
P043725 L4128 MA-RAILWAY RESTR & PRIV Morocco 1997 PSD TW 85 100 85 S L H
P005523 L4231 MUNICIPAL FINANCE II Morocco 1998 UD TA 70 25 18 S L M
P005519 L4426 LAKHDAR WATERSHED MG Morocco 1999 RDV TA 4 11 0 S NEV M
P052247 L4464 MA-PILOT FISHERIES DEV. Morocco 1999 RDV TP 5 52 3 MS L M
 P005524 L4402,L4403 FES MEDINA REHABILITATION PROJECT Morocco 1999 UD TA 14 52 7
P005749 L3840 TUNISIA—RURAL ROADS PROJECT Tunisia 1995 TR TA 52 96 49 S L SU
P046832 L4202 TN-MUNICIPAL DEV. II Tunisia 1997 UD TZ 80 32 26 MS L M
P042287 L4069 ECAL I Tunisia 1997 FSP TP 75 28 21 S L M
P043700 L4357,L4358 TN-TRANSPORT SECTOR
INVESTMENT PROJECT Tunisia 1998 TR TPTW 50 92 46
P005733 L3691 Northwest Mountainous Areas
Development Project Tunisia 1994 ENV TA S L SU
P005806 C2177 Multi-mode Transport Project Yemen, Rep. of 1991 TR TA MS L SU
P049735 C3298 Privatization Support Project Yemen, Rep. of 2000 PSD Not Not Not
Appli- Appli- Appli-
cable cable cable
P043109 C2878 PUBLIC WORKS PROJECT Yemen, Rep. of 1996 UD TA 25 10 3 S L SU
P041267 C2819 RY-TRANSPORT REHABILITATION Yemen, Rep. of 1996 TR TATV 37 95 35 MS L M
P048522 C2932 EMERGENCY FLOOD REHABILITATION
PROJECT Yemen, Rep. of 1997 RDV TA 30 24 7 S L SU
P060132 C3168 RY Public Works II Yemen, Rep. of 1999 UD TA 50 23 12 HS L SU
P068830 C3353 RY-Second Social Fund for Dev Yemen, Rep. of 2000 SP TA 75 10 8
Region: South Asia
P077533 CH009 Emergency Community Empowerment

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
Project Afghanistan 2002 SDV TA 42 23 10 S NEV SU
P009509 C2569 Jamuna Bridge Project Bangladesh 1994 TR TA 200 99 198 HS HL M
P009518 C2927 Second Rural Roads & Markets
Improvement Bangladesh 1997 TR TA 133 89 118 S L SU
P037294 CN043 Third Road Rehabilitation &
Maintenance Bangladesh 1999 TR TA 273 86 235 MS L M
P009524 C3163 Dhaka Urban Transport Bangladesh 1999 TR TA 177 75 133 MU NEV M
P010522 C2733 Assam Rural Infra India 1995 RDV TA 126 39 49 S L SU
P039935 C2838,L3992 ILFS-Private Infrastructure Finance India 1996 PSD TATP 205 49 100 MU L M
P009995 L4192 ANDHRA PRADESH STATE HIGHWAY
PROJECT India 1997 TR TA 350 97 340 S L M
P045600 L4114 TA ST’S RD INFRA DEV India 1997 TR 52 0 0 S L M
P049301 C2950,L4156 A.P. EMERG. CYCLONE India 1997 PSD TA 150 25 38 U L SU
P035824 C3106,L4365 Div Agri Support India 1998 RDV TA 130 21 27 S L SU
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Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006 (continued)

IBRD/IDA IEG IEG

Loan/ Approval IBRD/IDA TR IEG Sustain- institutional
Credit fiscal Sector Comm Transport comm outcome ability development
Project ID No. Project Name Country year Boarda Modeb (US$ m) share (US$ m) ratingc ratingd ratinge
P049385 C3103,L4360 AP ECON RESTRUCTURIN India 1998 HE TA 543 21 114
P050637 L4478 TN URBAN DEV II India 1999 UD TA 105 17 18 MS L SU
P041264 C3243,L4492 Wtrshd Mgmt Hills II India 1999 RDV TA 135 3 4 S L SU
P059149 C3617,L4652 KARN SAL II India 2002 EP TA 100 3 3 MS L SU
P010509 C3008 MULTIMODAL TRANSIT Nepal 1998 TR TATZ 24 89 21 MU L SU
P045053 C3215 RURAL INFRA LIL Nepal 1999 TR TA 5 74 4 MS L SU
P010478 C2829 NWFP- COMMUNITY INFRA Pakistan 1996 UD TA 22 22 5 MU UL M
P049791 C3248 POVERTY ALLEVIATION FUND Pakistan 1999 FSP TA 90 15 14 HS L SU
P077834 C3687 NWFP Structural Adjustment Credit Pakistan 2003 EP TA 90 5 5 MS L M
P010277 L2814 Fourth Highway Project Pakistan 1987 TR TA S L SU
P010352 L3241 Transport Sector Project Pakistan 1990 TR MS L SU
P010375 L3335 Karachi Port Modernization
Project Pakistan 1991 TR TP S L SU
P058070 C3301 North-East Irrigated Agriculture Project Sri Lanka 2000 RDV TA 27 30 8 S L SU
P010363 C2183 Third Roads Project Sri Lanka 1991 TR TA MS UL M
P010420 C2495 Colombo Urban Transport Project Sri Lanka 1993 TR MU UL NEG
Source: World Bank data.
Note: All data for portfolio review is from July 1, 2006. The projects for which a field assessment was done by IEG and PPARs prepared are listed in bold and italics. FY = fiscal year.
a. EMT = energy, mining, and telecommunications; ENV = environment; EP = economic policy; PS = public sector; PSD = private sector development; RDV = rural development; SP = social protection; TR = transport; UD = urban development.
b. TA = roads and highways; TP = ports, waterways, and shipping; TV = aviation; TW = railways; TZ = general transportation.
c. HS = highly satisfactory; HU = highly unsatisfactory; MS = moderately satisfactory; MU = moderately unsatisfactory; NR = no rating; S = satisfactory; U = unsatisfactory.
d. HL = highly likely; U = unlikely; HUL = highly unlikely; L = likely; NA = not assessed; NEV = nonevaluable; UL = unlikely; UNC = uncertain.
e. H = high; M = medium; NEG = negligible; NR = no rating; SU = substantial.
 Table A.8: Alternative Degrees of Private Sector Responsibility for Provision of Transport Infrastructure/Services

Policy and National level: Private participation in regulatory/oversight committees (e.g., Planning/Regulatory Commissions, Roads Board, Facilitation Committees)
Planning Local level: Stakeholder participation in planning and monitoring committees for services, projects, expenditures
Design, build,
Government State Management Joint finance and Build, operate Private
Management department Community corporation contract venture Lease operate and transfer Franchise company
Budget Budget Budget Equity Equity banks Equity banks Equity
Sources of sovereign Budget banks equity banks (limited (limited banks Equity
outside borrowing self-help aid Budget bonds bonds recourse) recourse) (limited banks
finance aid aid bonds aid banks aid budget, aid budget, aid recourse) bonds
Examples New Zealand: Sweden: UK: Highways Zambia: China: Provincial USA: Las UK: Trunk Road USA California: Norway Buses UK: Railtrack
(Developing Rail Most private Agency (1994) Railways (1998) Expressway Vegas Transit Upgrades SR-91 (1994) (1996–2002)
countries in infrastructure roads Development (1993) (1995–) UK: Train
italics) (2003) New Zealand: Uganda: Companies Australia: Urban Operating Cost New Zealand:
Numerous local Air NZ (2001) Road Agency (1998–) Australia: UK: London toll roads (1995–) Main airports
roads built under Formation State Underground (1987–) (1998)
Community Germany: Unit—RAFU Railways infrastructure UK: Bus Quality
Driven Railways (DB) (1998) (1997–) (2002) France: Millau Contracts South Australia
Development (1993) viaduct (2001) (1998–) Ports (2001)
initiatives in Australia: UK: Portsmouth
developing Chile: Port main airports area road Bolivia: Airports Australia Italy:
countries Corporations (1996–) maintenance (1996) Melbourne: Autostrade

A P P E N D I X A : S T U D Y L O G I C A N D S T AT I S T I C S
(1997) (2003) Public Transport Spa (1999)
Mexico: India: Nhava (1999)
Colombia: Railways Portugal: Sheva container Germany:
Bogota: Trans- (1997) motorways terminal Colombia Bogota: Frankfurt
milenio bus rapid (1996–) (1997) Bus cos. Airport (2003)
transit co. (1999) Mozambique: (2001–)
Maputo Port Greece: South Africa: Mexico: ASUR
India: Ennore Port (2003) Athens Airport Road concessions (southeast)
(2001) (1995) (1997–) airports (1999–)

Source: World Bank data.

Note: Budget = national government budget; Equity = risk capital subscribed by shareholders in venture; Aid = foreign aid, from IFIs or bilateral sources; Banks = loans from domestic or foreign commercial banks (including syndicated loans);
Bonds = normally domestic bond issues (where local capital market sufficiently developed). The table is intended to apply to transport services as well as to transport infrastructure construction and maintenance. The former, including trucking en-
terprises, bus companies, airlines, independent train operators, shipping companies, stevedores, and other providers of individual port services, are often already in the private sector and would therefore normally belong in the last column on the
right.
113
A DECADE OF ACTION IN TRANSPORT

Table A.9: Active Projects with Transport Components

Approval Year Fiscal 1995–2006

Number of IBRD/IDA TR
Region Projects Commit. ($m)
Africa 80 3,187
East Asia and Pacific 71 5,412
Europe and Central Asia 37 1,808
Latin America and the Caribbean 48 2,510
Middle East and North Africa 24 826
South Asia 47 5,663
Total 307 19,406
Source: World Bank data.
Note: Active commitments as at July 1, 2006.

114
APPENDIX B: BACKGROUND PAPER SUMMARIES
Global Transport Financing Trends
Introduction
The public and private sectors are intrinsically
involved in the provision of both transport infra-
structure and services, but the dividing line be-
tween public and private varies significantly from
country to country and among the different modes
of transport. These variations reflect a wide range
of factors, such as the technologies available, the
scale of their capital requirements, changing views
of the relative importance of systemwide planning
and management (as against customer respon-
siveness in improving performance), the stock of
managerial and technical skills, government fi-
nances, and—last but not least—each country’s
historical experience and inherited institutions.
The Bank’s 1994 World Development Report
(WDR) (World Bank 1994b) reviewed the per-
formance of infrastructure support and delivery
globally; it concluded that in many developing
countries greater reliance should be placed on the
private sector for direct provision of infrastructure
and services. Governments, it proposed, should
concentrate more on creating and maintaining
legal and regulatory frameworks to attract private
providers but, at the same time, safeguard the in-
terests of the poor, improve environmental con-
ditions, and coordinate cross-sector interactions.
This IEG summary of international trends in pri-
vate sector participation in transport uses as a
point of departure both the Organisation for Eco-
nomic Co-operation and Development (OECD)
and Latin American performance. OECD has taken
the lead in private sector development in transport,
and Latin America has shown the most progress
in the developing world. The summary gives a brief
account of developments in the other Regions
and reaches some tentative conclusions.
OECD Leaders in Reform
Recent OECD research concluded that, at the end
of the 20th century, the transport sector was most
liberalized in four of its member countries: Aus-
tralia, New Zealand, Britain, and the United States.
But the past 10 years have seen significant differ-
ences among them in the degree of private par-
ticipation in the provision of infrastructure and
services, as well as the extent to which it has
changed. The best available figures suggest that the
private share of total annual investment in trans-
port (excluding vehicles for personal use) may
have risen slightly in the United States through the
1990s to about 20 percent and strongly in Australia,
to as much as 40 percent in the early 2000s.
The biggest change in the volume of private in-
vestment going into transport has been with re-
gard to trunk road construction and maintenance.
Starting from the mid-1980s, Australia has suc-
cessfully completed nearly 10 urban motorway
build, operate, and transfer projects (BOTs), with
traffic risk taken by the private investors. Britain
has had one project of this type, more than a
dozen design, build, finance, and operate (DBFO)
projects for upgrading the national core network,
and a number of smaller projects along similar
lines offered by local government bodies. A few
American states, including California, Texas, and
Virginia, have also been active participants in fed-
eral programs to support state public-private part-
nership (PPP) initiatives for the construction/
operation of toll roads and lanes.
115
A DECADE OF ACTION IN TRANSPORT
The transport mode that has seen the largest shift
from government to private sector responsibility
is mainline rail. Government-owned railway facil-
ities were sold to the private sector, virtually in their
entirety, by New Zealand in 1993 and the United
Kingdom in 1995–97. The Australian government
and four Australian states sold their railways in
major part between 1997 and 2002. Numerous
follow-on mergers—as were also important over
the last decade in the traditionally private U.S.
railways—meant that by 2004, main freight rail
services in Australasia were provided by two major
private transport/logistics groups. In Britain and
New Zealand, however, the intended extent of
government withdrawal was rolled back in the
early 2000s, with the public sector again taking
larger responsibility for track infrastructure.
In air transport, the main airlines have been pri-
vately owned at least since the late 1980s in all four
countries, as have most of the principal airports
in Britain. Major trends of the past decade have
been the rise of privately owned low-cost carriers
and the sale of all main airports in New Zealand
and Australia. Low-cost carriers have been an im-
portant counterweight to the concentration of
U.S. airlines through mergers and now account for
nearly 25 percent of scheduled air traffic in the
United States. They have also enjoyed very rapid
traffic increases in the United Kingdom, particu-
larly since deregulation of the European Union
(EU) internal traffic market in 1997, and in Aus-
tralasia since Virgin Blue was established in 2000.
The resultant collapse of Australia’s second con-
ventional airline, Ansett, led to the resumption of
majority government ownership of Air New
Zealand (its principal owner at the time).
The past decade has also seen important changes
in the organization of urban public transport in
three of the four countries—but not in the United
States, despite increasing concern there about
high costs and low efficiency of public sector op-
erators. Less than 10 percent of U.S. regular bus
services are competitively tendered and fewer
than 30 percent of school bus services. Domi-
nant trends in Australia and New Zealand, in con-
trast, have been toward competitive contracting
of route or area franchises, following the pattern
116
initiated with London bus services in the middle
1980s.1 Increasing use has been made in all three
countries of “quality contracts,” under which the
private operators commit to deliver agreed stan-
dards of service in return for government com-
mitments to improve infrastructure. Experience
with new fixed-rail systems, for which significant
capital subsidies have been provided to public-
private partnerships, particularly in the United
States, has often been disappointing in terms of
traffic attracted.
Other Main OECD Countries
OECD analysis of other main member economies
beyond the four just discussed concluded that
they too had considerably liberalized their trans-
port markets in the last two decades of the 20th
century. Those countries’ progress was at a some-
what lower level, and some EU countries lagged
behind others. Private participation in the provi-
sion of transport has also grown over the past 10
years in the same three ways—opening of markets
previously served by public monopolies, sale of
government-owned infrastructure, and formation
of PPPs to develop new infrastructure. But the
pace of change has been slower, and less attention
has sometimes been given to the accompanying
increased private sector role with measures to
ensure sustained competition among private
providers.
The most widespread involvement of the private
sector in the operation of transport infrastructure,
and the provision of some of it, in these countries
is probably in ports. Government initiatives in
many European countries and Canada in the late
1980s and early 1990s modified the privileged po-
sition of dockworkers, decentralized port man-
agement, and made ports more financially
autonomous. These changes opened the way for
much increased private investment. Major ports
have largely adopted the landlord port model,
and a reasonable degree of competitive pressures
on private operators appears to have been main-
tained. Japan, in contrast, has retained strong cen-
tralized regulation, with resultant high port charges.
The obstacles that traditional rules and practices
pose to effective competition in the small ports of
Europe also remain a serious concern.

Private sector involvement in the management
and financing of roads has varied greatly among
these countries, but it has been increasing over the
past decade. In continental Western Europe some
10,500 kilometers (km) of tolled motorways (about
half the area’s tolled network and one-fifth of all
its motorways) are now under private manage-
ment, mainly in Italy, Portugal, and Spain. Some un-
tolled sections, especially in Portugal and Spain,
have also been built under DBFO concessions.
France has awarded a number of major new BOT
contracts on an open competitive basis in the past
5 years.
The past decade has also seen considerable move-
ment in arrangements for the provision of urban
transport services, with important further effects
expected in coming years. Aside from Japan, the
Scandinavian countries, and, to a lesser extent, Por-
tugal and Spain, virtually all the other continen-
tal European countries had their public transport
almost entirely provided in the early 1990s by
public sector agencies; the same was the case, and
remains so, in Canada. Promoted by the European
Commission, change spread first to the Nether-
lands and then to increasing numbers of towns in
Germany and Italy. Local rail services have been
increasingly offered as concessions to indepen-
dent operators in some German states. Experi-
ments have been under way in Norway with better
targeted performance-based bus contracts. French
towns have been transferring more risks to con-
cessionaires for bus services, and foreign com-
panies have for the first time won some of the
contracts.
Japan’s railways were successfully restructured
and privatized in 1987, and Canadian National
was sold on the stock exchange in 1995. Although
the continental European railways remain in the
public sector, most of them have been undergo-
ing important reforms and reorganizations to
strengthen aspects of their commercialization
and to reduce costs. The European Commission
has strongly emphasized the separation of infra-
structure and operations, initially in accounting
terms and subsequently organizationally. Inde-
pendent operators, besides providing urban pas-
senger services, as in some areas of Germany,
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
have also begun to develop long-distance freight
services, as in Germany, Italy, Sweden, and Switzer-
land. Major PPP projects, supported by substan-
tial public capital contributions, have been initiated
for improving intercountry rail links, such as the
high-speed lines in the Netherlands and across the
Pyrenees between France and Spain.
Low-cost scheduled air services began to develop
in continental Europe following the 1997 dereg-
ulation of the EU internal market. Market pres-
sures have led to some important mergers among
the previously excessive number of national flag
carriers, and most of the major airlines are now
traded on the stock exchange. About a dozen of
the more important European airports have been
partially privatized, principally those in Austria,
Denmark, Germany, Italy, and Switzerland. Athens’
new airport was built under a 30-year DBFO con-
cession signed in 1995 with large capital support
from the EU and the Greek government.
Latin America and the Caribbean
The past decade has seen a larger increase in the
relative role of the private sector in transport in-
frastructure in this Region than in any other. All the
large countries except Venezuela have increased
private participation in most of the main transport
modes, and more than half of the medium-size
countries have been almost equally active. Some
estimates, based on figures for the Region’s larger
economies, suggest that the private share of total
investment in transport in the 1990s averaged as
much as 50 percent. This figure mainly reflects a
sharp reduction from earlier years in the volume
of public investment in the sector.
Roadways
The largest volume of private investment has been
in maintenance, rehabilitation, or construction of
roads that were tolled on completion. Some are
motorways, but most are relatively high-grade
trunk roads. A survey undertaken by the United Na-
tions (UN) Economic Commission for Latin Amer-
ica and the Caribbean indicated that by early 2003
Latin America had a total of some 35,000 km of
roads under concessions to private operators, in-
cluding nearly 11,000 km in Argentina, 10,000 km
in Brazil, 6,000 km in Mexico, and about 2,400 km
117
A DECADE OF ACTION IN TRANSPORT
each in Chile and Colombia, as well as short
stretches in many of the smaller countries.
Besides these changes at the management level,
Latin America has also been at the forefront of ex-
perimentation with improved methods for in-
volving the private sector at the execution level,
especially for standard rehabilitation and mainte-
nance. For main roads with traffic insufficient to
warrant conventional tolls, Argentina introduced
in the middle 1990s multiyear rehabilitation and
maintenance contracts. Payment was awarded to
the contractor according to the road standard at-
tained rather than for the individual maintenance
interventions undertaken. Such performance-
based contracting rapidly attracted international
interest, and similar programs were started by
the highway departments of several other Latin
American countries, as well as in other Regions.
Railways
Over the 1990s almost all railways in the Region
were concessioned to private operators, starting
with Argentina’s freight services in 1991–93 and
its more substantial Buenos Aires passenger op-
erations in 1994–95. Direct public sector man-
agement of railways is now limited principally to
passenger services in a few metropolitan areas and
the overall network in two or three smaller coun-
tries such as Cuba and Uruguay.
The facilities were normally concessioned as inte-
grated operations, including track as well as ser-
vices (predominantly freight). The main focus was
on devising viable regional packages of the existing
assets—and access rights for adjoining conces-
sionaires—that would at the same time facilitate the
offer of alternative services to shippers, especially
at major traffic nodes. As in Australia, the initial con-
cessions have been followed by some important
mergers (in this Region, mostly international),
which were considered consistent with market
potentials and not inimical to competition.
Ports
Whereas railway reform was often motivated by the
desire to reduce the fiscal burden of operating sub-
sidies, the main object of port reform has been to
enable countries to draw the full benefit from in-
118
ternational trading possibilities. Latin America has
a long tradition of privately built and owned in-
dustrial ports, largely for export of bulk com-
modities. They have continued to expand in
number and generally to function well. The focus
of the reforms has been rather on the common-
user ports, which, in the early 1990s, typically still
suffered from highly centralized management,
public monopoly in the provision of all services,
and restrictive labor practices.
In countries such as Argentina, Colombia, and
Mexico, the main common-user ports have been
transformed into landlord operations. Under this
model, major terminals are provided and run by
global or Latin American port-operating com-
panies, and the full range of minor services are of-
fered by local private enterprises. But in some
small countries, as in Central America, common-
user ports and port services remain largely pub-
lic monopolies. Most countries lie between these
extremes and are still in the process of transition.
Public Transport
In Latin America, as in most developing regions,
public transport continues to account for a high
proportion of urban residents’ movements (typ-
ically upward of 50 percent in major cities) com-
pared with OECD countries. The service is pro-
vided mainly by privately owned and operated bus
companies, loosely regulated.
Among efforts to cope with increasing traffic con-
gestion resulting from the growth of population
and private cars, several Latin American coun-
tries have been leading busway developers. An im-
portant recent initiative in this direction is the start
of a citywide network (more than 50 km now of
an eventual 400 km completed) in Bogota. The
higher and more reliable service standards re-
quired by the private bus companies under stricter
franchises, combined with public sector action to
improve traffic regulation and build and operate
the dedicated infrastructure, are yielding major
improvements.
Airways
In air transport, liberalization has continued, and
markets, both domestic and international, have

shown strong (though fluctuating) growth. Most
carriers are now in the private sector. Various ex-
periments have been made with increased private
participation in management and financing of air-
ports, and they have shown some tendency to ac-
celerate. Main airports in Chile were concessioned
individually in the second half of the 1990s and
those in Argentina, Bolivia, and Mexico in multi-
airport groups. BOT contracts for upgrading of in-
dividual airports have also been made in 10 other
countries.
Other Regions
In the five Bank operating Regions covering Africa,
Asia, Europe, and the Middle East, private par-
ticipation in provision of transport infrastructure
has so far been more limited than in Latin Amer-
ica and the Caribbean. In each of the five Re-
gions, about one-third of the countries undertook
one or more transport projects involving private
capital over the course of the past 10 years. With
few exceptions, the breadth of private involvement
across different modes within each country has
also been more limited than in Latin America and
the Caribbean.
In the wake of the Asian financial crisis of 1996–97
and following an earlier initiative that had yielded
limited results, the Republic of Korea revised leg-
islation governing private participation in the
management and financing of infrastructure. Pro-
cedures for bid awards were made more trans-
parent, and tax incentives and generous revenue
guarantees were introduced. In 1998 a port con-
tainer terminal was offered for the first time for
foreign investment.
Since then, projects aggregating some $25 bil-
lion–$30 billion (including government grant con-
tributions averaging 25 percent) have been ini-
tiated, most of them transport works, including
toll tunnels and highways, port developments,
and rail access to Incheon airport. The revenue
guarantees proved costly and were revised sharply
downward in 2003. Financing of most of the proj-
ects has been managed by the government-owned
Korean Development Bank. The volume of private
financing involved is unclear but has probably
been increasing from domestic sources, benefit-
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
ing from simultaneous efforts to develop the do-
mestic capital market. But further container ter-
minal investments have also been attracted from
international port operators.
Private capital has made a marginal but significant
contribution to China’s recent large investments
in roads (including creation of a tolled network
of trunk roads of at least 20,000 km), but it is un-
clear whether it has contributed significantly to
their efficiency. Two principal sources were tapped.
The first was equity contributions from overseas
(mainly Hong Kong) financial partners, which
made joint ventures with provincial communica-
tion departments for construction of toll roads but
played little part in operational decisions. From
the mid-1990s, and especially after clarification of
the law in 1997, funds were also raised from
China’s own stock markets; shares in packages of
completed toll roads were offered (securitiza-
tion). Some of the companies formed for this
purpose were also able to float revenue bonds and
raise bank loans against the security of their rev-
enue streams.
Concerned about port capacity/efficiency obsta-
cles to the country’s rising international trade as-
pirations, the government of India finally decided
in 1995 to experiment with foreign private par-
ticipation. It offered a concession for construction
and operation of a new container terminal at
Nhava Sheva, adjacent to the modern public sec-
tor facility run by the Jawaharlal Nehru Port (JNP)
Trust near Mumbai. The tender for a 30-year con-
cession was won by P&O Ports (Australia) and
signed in 1997. Following its completion in mid-
1999, Nhava Sheva attracted increasing amounts
of traffic from JNP. The latter responded by im-
proving on its previous efficiency, though not to
the level achieved by its competitor. The experi-
ment was considered successful and led to a se-
ries of investments by P&O and other international
operators in different Indian ports.
Confronted with the addition of some 5,000 km
of international borders as a result of the break-
up of the Yugoslav Federation and the obstacles
these posed to international trade, the eight core
countries of southeastern Europe gradually came
119
A DECADE OF ACTION IN TRANSPORT
Box B.1: Expanding Trade by Easing Movement across Borders in Southeastern Europe
The past 20 years have seen rising recognition worldwide of
the significance of logistics for international trade flows and of the
contributions that better functioning of transport can consequently
make: increasing exports, lowering the cost of imports, and stim-
ulating private productive activity. It has also increasingly been rec-
ognized that achievement of real operational improvement depends
crucially on improved communication among private traders and
freight forwarders, transport providers, and the government serv-
ices that regulate and control movements across borders.
One region that has required particular attention is south-
eastern Europe, where the breakup of the Yugoslav Federation
added some 5,000 km to international borders. The mostly small
countries of the area often face multiple border crossings for
much of their international trade. Starting with an initiative spon-
sored by the United States and Italy in 1996 to promote regional co-
operation, and assisted strongly by the EU, the eight countries
that form the heart of this region (Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, the former Yugoslav Republic of Macedonia,
Moldova, Romania, and Serbia and Montenegro) have gradually
come together in a focused joint effort to ease border crossings
and increase trade flows.
Since the program started in 2000 in most of the countries,
border-crossing delays have been substantially reduced (from av-
erages of 3–5 hours to about 1 hour) at the more than 20 locations
chosen for initial focus, contributing to a rapid revival of trade. Cus-
toms performance indicators have generally strengthened, and lim-
ited survey results indicate possible reductions in the number or
size of bribes that transporters were obliged to pay to cross some
borders. The approach developed has introduced several impor-
tant innovations in the roles of the public and private sectors in these
countries:
• Formation and development of national trade facilitation com-
mittees (pro-committees)—mostly originally started under the
U.S.-Italian initiative—bringing together Chambers of Commerce
together in the second half of the 1990s to launch
a public-private initiative, essentially at the over-
sight level, to reduce border-crossing problems
(see box B.1). The central focus chosen was mod-
ernization and simplification of customs proce-
dures. Related computer applications were
introduced as instruments toward gradual change
120
and transport associations with representatives of the public
agencies involved in border crossings, and organization of the
regional meetings of these bodies back to back with regional
meetings of the government bodies chiefly responsible for the
overall program in all eight countries.
• Central focus on modernization and simplification of customs
procedures, introduction of computer applications to make
processes more efficient and transparent, and improvement in
human resource management, all as instruments that will grad-
ually shift the basic orientation of the customs services from ob-
structing easy flow of private international trade to actively
facilitating it. Commonly agreed performance indicators are
collected monthly (with delays from relatively few countries) and
published on the Internet, which helps stimulate action toward
further improvement.
• A common regional Web site has been developed, largely under
leadership of the Chambers of Commerce, to promote trade fa-
cilitation, provide up-to-date information on procedures for
crossing the various border points and on delay times, and to con-
vey distance-learning programs in transport and logistics man-
agement, assisted by international associations.
• Periodic surveys of professional private sector experience and
opinion surveys about border crossing and customs have been
conducted by independent consultants in collaboration with the
Chambers of Commerce and Internet publication. These serve
as a valuable cross check to the official performance indicators
and enable the authorities, as they set priorities, to give more
weight to citizens’ experiences.
Benefiting from this experiment, other countries—particularly in
the Caucasus and Central Asia—are initiating similar efforts, and
the southeastern European countries are envisaging a second
joint phase, extending the effort to cover remaining road border
crossings and those on railways and the region’s important
waterways.
of customs officers’ attitudes and performance.
Agreed-on performance indicators, and much
other trade-related information, are regularly pub-
lished on the Internet and discussed in inter-
country meetings. Delays have been substantially
reduced at the targeted border points, and there
is an indication of a possible reduction in the

number and/or size of bribes that transporters
have to pay to cross borders in some countries.
In Africa, following a partially successful initiative
in the early 1990s to create a road fund and
strengthen road maintenance, Tanzania more
formally established a road fund, along with a
public-private board to run it, in 1999. Then, in
2000, a semiautonomous executive agency to man-
age the primary network (TANROADS) was es-
tablished. The board’s extensive monitoring and
auditing oversight helps significantly ensure that
user charges to support maintenance are duly
collected and devoted to the intended purpose.
Local contractors have benefited from long-term
efforts to support their development; they now
handle most of the maintenance work. In line
with the legislation establishing it, the board is also
helping address the previously neglected weak
capacities of district and urban councils to main-
tain the extensive networks for which they are
formally responsible.
South Africa has long experimented with toll
roads, initially as public sector undertakings, but
in the late 1990s also as concessioned operations.
The South African National Roads Agency Limited
(SANRAL) was created in 1998 as a government
corporation responsible for the country’s national
roads. From the start SANRAL has put a strong em-
phasis on mobilizing the energy and resources of
the private sector for road development and to
strengthening local enterprises. Three major
roads, each about 400 km total length, have been
concessioned to joint foreign/national consortia,
with transfer of existing assets, requirement to
build/rebuild certain sections and improve the
remainder, and full transfer of construction and
revenue risks. All nonconcessioned national roads
are now covered by routine road maintenance
contracts, tendered competitively to consulting en-
gineering firms against performance specifica-
tions that require 80 percent of the work to be
subcontracted to small contractors that have low
entry barriers and that are supported by training.
A more in-depth, global coverage of private sec-
tor transport initiatives is covered in a Bank work-
ing paper intended as a companion paper to
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
the evaluation (Willoughby 2007) and published
simultaneously.
Results to Date
At the broadest level, this review suggests that the
management improvements highlighted in the
1994 WDR have stood the test of time in the
OECD countries. It also suggests that they have
been quite widely pursued by developing coun-
tries and have often made a significant difference
to transport sector performance. Major weak-
nesses that emerged in some of the earlier pri-
vatization efforts—such as Chile’s urban public
transport reforms, Argentina’s freight railway con-
cessions, and Mexico’s toll-road development—
have been largely avoided in the reform initiatives
introduced in the last decade.
Pursuit of the WDR theses through an increased
private sector role in trade-related port and rail-
way infrastructure has generally had significantly
positive effects on technical and allocative effi-
ciency. This has been the case even where mod-
ifications have had to be made to the structures
first chosen for increased private participation, as
with railways in the United Kingdom. Positive
impact has quite often been further enhanced
by follow-on effects on other institutions and by
postprivatization restructurings and mergers. Ef-
ficiency and service indicators have typically shown
sustained improvement following the introduction
of private participation, and traffic growth has
tended to exceed that of the regional economy,
reflecting in part the attraction of types of traffic
previously handled by other modes and facilities.
The effects have tended to be more significant
when the privatization was preceded or accom-
panied by measures to reduce nontechnical
regulation of the mode concerned and its com-
petitors, when the structures offered to private
bidders were designed to sustain competition, and
when appropriate measures were taken to en-
sure access of competing providers to any facili-
ties with local monopoly characteristics.
In the roads field, the most clearly positive effects
of the WDR principles on technical and allocative
efficiency have been through their application to
121
A DECADE OF ACTION IN TRANSPORT
the management of road networks generally: clar-
ification of road department accountability and
greater management autonomy; establishment
of supervisory and consultative bodies that rep-
resent users better; and transparently competitive
contracting of works to the private sector, in-
creasingly against performance-based specifica-
tions. It is probably fair to characterize the
combination of these and related elements as a
revolution in road management that has been
under way since the late 1980s and early 1990s.
So far, however, that revolution is concentrated
in only a few countries in each Region. Road
funds have also been able to make a useful con-
tribution in some countries’ public expenditure
management systems, but the main emphasis in
the majority of countries needs to remain on im-
proving the allocation of roads spending and its
technical efficiency.
Growth of partially privately financed toll roads has
clearly been an important phenomenon of the
decade since the WDR, especially in developing
countries. Although such roads represent tiny
proportions of the network, they often carry sig-
nificant proportions of overall traffic. They have
also accounted for the largest share of the total
investment for transport projects recorded in the
Bank’s public-private infrastructure (PPI) data-
base, although that share has been steadily de-
clining, from 72 percent in the 5 years immediately
preceding the WDR to 38 percent in the period
1999–2003.
The net effects of toll roads, or the private fi-
nancing of them, on the technical and allocative
efficiency of the transport sector are nonethe-
less complex, and convincing assessment of the
facts is comparatively rare. In Latin America, which
accounted for more than half of PPI toll-road in-
vestments throughout the decade, it may be con-
cluded that most of the programs had positive
effects on technical and allocative efficiency. Bid-
ding appears to have been more transparently
competitive than under traditional government
contracting.
Second, despite important exceptions, tolls were
normally held to 1–2 U.S. cents per car-km in
122
maintenance concessions and to 2–4 U.S. cents on
concessions involving major upgrades and new
construction. Third, the huge reductions in pub-
lic investment in transport that resulted from
macroeconomic considerations increased the mar-
ginal value of resources raised from elsewhere.
Greater doubt surrounds some of the Asian pro-
grams, including China, which alone accounted
for nearly one-fifth of PPI toll-road investments in
all developing countries during the period. There
is no evidence of private investment in China
having introduced new or additional technical
efficiency. Tolls were typically higher than in Latin
America, and much higher relative to the coun-
try’s lower income levels. Traffic diversion, espe-
cially of trucks, has been a significant problem.
More ample public resources were available, al-
though the private funds nonetheless constituted
a useful supplement.
Not directly stemming from the management em-
phases in the 1994 WDR but important for their
future application have been advances in charging
road users for the costs that their activity imposes
on society—particularly the cost of congestion, pol-
lution, and accidents. Whereas pricing and taxing
structures to deal with these externalities were
largely limited at the start of the 1990s to Singa-
pore and some experiments in Norway, a few
roads (mostly privately financed) have since been
developed specifically with time-varying electronic
charging systems that help reduce congestion. A
notable new trend has been construction of large-
scale urban motorways (largely privately financed)
with sophisticated tolling systems, as in Australia
and Chile. London has very successfully intro-
duced a central city access charge, and Switzerland,
Austria, and Germany have all created electronic
systems to charge trucks for the costs that their
movements impose.
Overly centralized government-owned urban pas-
senger services, torn between conflicting ob-
jectives, still exist in some cities of transition
economies and a few developing and OECD coun-
tries. They can often benefit from a direct appli-
cation of the WDR principles in their rationalization
and restructuring.

A more common problem in the developing coun-
tries is development of better-regulated compe-
tition among existing private providers. They
could generate a more reliable and safer set of ser-
vices that link appropriately. There is stronger
recognition than there was 10 years ago, in OECD
and developing countries alike, of the need for in-
tegrated efforts between public managers re-
sponsible for road infrastructure, traffic flow, and
parking regulations, and the normally private bus
companies, with interdependent performance
targets jointly set.
Finally, the pressures of increasingly open com-
petition in the provision of international air ser-
vices, and in many countries domestic air services,
too, have brought improvements in the technical
efficiency of air transport over the last 10 years.
The rise of low-cost carriers, now extending to
many of the larger developing countries, has
made a significant contribution to transport’s al-
locative efficiency. Private management of public
airports is largely an innovation of the past decade,
but how far this has contributed to these effi-
ciency improvements is not yet clear.
Evaluation of Bank Support for
Road Funds
Introduction
The focus of this section is road funds, an in-
strument several Bank operations have supported
to redress the long-term underfunding of road
maintenance. Over the past 10–15 years Bank
projects or sector reviews have supported the
restructuring of road management and road main-
tenance finance, including the creation of inde-
pendent road boards, the establishment of road
agencies, and the establishment of properly man-
aged road funds. Such road funds are commonly
known as second-generation funds.
The Bank’s interest in road funds and road man-
agement originates in a long-standing “crisis” con-
cerning the quality of road maintenance in most
developing countries, especially in the lower-
income ones. The failure of governments to pro-
vide adequate funding for road maintenance was
seen as one of the critical factors; road infrastruc-
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
ture had deteriorated and countries were rapidly
losing the value of their road assets. Road funds,
independent of the budget and providing an ad-
equate level of funding to finance maintenance ex-
penditures, were seen as a possible solution.
For more than 15 years the Bank has led a multi-
donor program to help Sub-Saharan African coun-
tries improve the performance of their transport
systems and services. This program has supported
the establishment of modern road funds and
complementary reform of highway management.
The Bank has also been involved in similar activ-
ities in other Regions. Three main sources have
been used to prepare this section: (i) a literature
review, (ii) IEG’s database, and (iii) a survey of
Bank staff. All three elements together provide a
reasonably clear picture of the effectiveness of the
road funds and the conditions surrounding them.
In particular, the SSATP Road Maintenance Ini-
tiative Monitor Series provides useful data.
Road Management Reform
From the 1990s, a majority of the Bank road proj-
ects focused on maintenance. Yet progress was er-
ratic. Most countries did not have the capacity to
increase and sustain budget funding for road
maintenance at the required level. In response,
the Bank in 1995 issued a report suggesting that
the maintenance crisis could be effectively tack-
led by addressing four issues:
(i) Ownership: Empower road users and en-
courage them to take an interest in the man-
agement of roads; an essential component
of this concept was creation of a roads board.
(ii) Funding: Secure stable and adequate flows
of funds.
(iii) Responsibility: Creation of an organizational
structure for managing the different com-
ponents of the road network.
(iv) Management of a businesslike road agency,
including strong financial management and
accountability.
The driving force for this approach was not road
maintenance, but a broader perspective of the
road sector. Could roads be put in the marketplace
on a fee-for-service basis, like a business, as has
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A DECADE OF ACTION IN TRANSPORT
been done with other infrastructure services?
This would be a “commercial approach” to road
financing.
Financing Road Maintenance and Road Funds
Two approaches are followed: (i) The budget ap-
proach is the most widely used. It assumes that
road expenditures (except for toll roads), includ-
ing maintenance, are a public expenditure that
need to be covered by the national budget. Fuel
taxes, vehicle registration fees, and other levies are
taken as general taxes. Extrabudgetary funds are
deemed to hinder government’s efforts to allocate
funding to national priorities. (ii) The road fund
approach postulates that road users should pay
for the cost of the roads and that revenue thus gen-
erated should be applied to cover road costs. The
instrument is a road fund that generally becomes
the main source of finance for road maintenance
and other road expenditures. This approach, with
variations, has been used in the United States,
Japan, and New Zealand since the mid-1950s and
is being used in more than 30 emerging econ-
omies. Users pay “user charges” mainly in the
form of a gasoline levy, which generally provides
the bulk of revenues. Income from these charges
is, in principle, automatically allocated to road ex-
penditures, especially maintenance.
Road funds meeting the “commercial approach”
are known as second-generation road funds, to dif-
ferentiate them from older road funds that were
basically a line in the budget. However, seldom do
the funds meet all the second-generation criteria.
The second-generation funds operate on the prin-
ciple that any extra spending on roads is financed
through extra payment by road users. Therefore,
second-generation funds are budget neutral; some
macroeconomists disagree with this view.
Bank Policy and Practice
The Bank for many years lacked an official policy
toward road maintenance finance, and in some in-
ternal reports, notably in the 1980s, generally
opposed road funds on macroeconomic grounds.
More recently (in 2004) it was agreed that the
“Bank sometimes endorses public enterprise-style
road funds to redress long-term underfunding of
maintenance.” Although with variations among
124
Regions, Bank economic reports have become
increasingly supportive of road funds, sometimes
improving existing funds and at other times cre-
ating second-generation funds from scratch.
Design and Management of Second-Generation
Road Funds
There are large variations from country to coun-
try. Many of the second-generation funds have
been restructured frequently since they were first
created. Restructuring of the fund in Benin has
been effective, converting it into an autonomous
agency with less staff and a competent team and
providing it with adequate resources. Attempts to
reform the fund in the Republic of Yemen, how-
ever, have been less successful so far. This is partly
because the country has been in a financial crisis
resulting in the need to keep a strict control of all
income and expenditures. In Argentina, between
the 1970s and 2006, there have been cycles of cre-
ating and then reforming or dismantling road
funds. The existing road fund has recently been
amended to compensate private toll-road oper-
ators for low toll rates.
Road Boards—Composition and Mandate
Practically all the second-generation funds have
private sector representation on their boards. In
more than half, the private sector representatives
are in the majority. Some boards have executive
and others only advisory powers.
Revenue Sources and Channeling and Allocation of
Resources
Funding for the road boards is generated mainly
by a fuel levy, generally set as a fixed amount per
liter and complemented by other sources, such
as tolls and fees. Most second-generation funds
focus on routine and periodic maintenance of
the national network, but some allow part of the
resources to be used for road rehabilitation. Oth-
ers also allocate resources to maintain municipal
or provincial roads and even subsidies to road
transport.
Performance of Road Funds—Outcome Indicators
In several countries the percentage of roads in
good condition has significantly increased. In
Benin, the increase has been 9.4 percent per year

since the creation of the road fund. In Guatemala,
the percentage of roads in bad condition dropped
from 40 percent in 1994 to less than 20 percent
in 2001. In countries without this information, a
proxy indicator is the percentage of estimated
needs financed. The level of maintenance funding
was reported to have increased significantly in
Honduras and in Guatemala, which had a 250
percent increase over 6 years. In Uzbekistan, the
resources of the road fund increased almost five
times over a period of 4 years. In contrast, the ex-
perience in Africa is less positive; only one third
of the 27 road funds in SSATP member countries
are regularly meeting routine maintenance ex-
penditure needs.
Performance of Road Funds—Process Indicators
• The percentage of maintenance works con-
tracted out has increased significantly, reach-
ing close to 90 percent in Zambia and Ghana.
• The percentage of funding for road mainte-
nance from local rather than external sources
has also increased in some Latin American
countries (in Honduras, from about 20 percent
in 1995 to almost 100 percent in 2000).
• Results regarding the allocation of resources
have been mixed, as many countries continue
to use standard formulae rather than a sys-
tematic assessment of maintenance needs. In
some African countries, disbursements appear
to be generally biased toward urban and main
roads. In Ghana, the road fund provides fund-
ing to the districts and this is supported by the
Ministry of Finance.
• In Honduras, microenterprises for carrying out
routine road maintenance have been created as
a result of a requirement by the road fund.
• Some of the boards have put in place measures
to improve transparency. In Ethiopia, the board
publishes its budget quarterly. In Zambia, any
user can access information on the disburse-
ment of the fuel levy. In most countries, bids
are advertised in the local press and some-
times through the Internet.
• Few countries appear to carry out regular tech-
nical assessments of the works. Ghana is an ex-
ception, as its road fund regularly produces
technical audits. In Tanzania, the road fund
undertakes annual technical audits of 20 per-
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
cent of the work it finances; generally, admin-
istrative costs are set not to exceed 3 percent
of the fund’s income.
Lessons
• Second-generation funds are appropriate when
the lack of finance for maintenance has led to
a severe deterioration of the road network,
provided there is government commitment
to off-budget financing of maintenance and
to commercially oriented reforms of road
management.
• A road fund should not be established when
there is a high level of corruption and little like-
lihood of having independent audits and trans-
parent procurement.
• Financing of road maintenance should be
viewed in the broader context of road
management.
• Monitoring and evaluation of second-
generation funds should start with credible
assessments of road condition, trends in allo-
cation for road maintenance, and efficiency of
road maintenance operations.
• Private sector participation in the second-
generation road boards is an effective way to
improve transparency and accountability in
the use of road maintenance funds.
• There is improved effectiveness of the
funds disbursed through multiyear budgeting
arrangements.
Country Case Study—Brazil
This case study shows the Bank’s approach in
the transport sector to poverty reduction in a
large country that has huge potential but a skewed
income distribution; Brazil also must recover
from a national financial crisis.
Introduction
The transport sector represents about 2 percent of
Brazil’s gross domestic product (GDP). The econ-
omy is disproportionately dependent on road
transportation; more than 60 percent of the coun-
try’s freight in terms of ton-km moves by truck, 20
percent by rail, and 13 percent by coastal naviga-
tion and inland waterways. The paved federal high-
way network (58,000 km) is the cornerstone of the
country’s transport sector.
125
A DECADE OF ACTION IN TRANSPORT
Brazil also has the largest railway system in Latin
America (29,000 km). Trains are used primarily to
carry goods—two-thirds of which are iron ore and
coal. Intercity railway passenger traffic has virtually
disappeared, but important developments have
taken place in urban passenger transport. The pri-
vatization of the country’s entire freight railway net-
work between 1996 and 1999 resulted in substantial
improvements in the rail infrastructure and rolling
stock, as well as gains in efficiency, output, and the
quality of services. Upgrades of the commuter rail
systems in most of Brazil’s metropolises have also
laid the foundation for the further modernization
of the sector. Nevertheless, some projects have im-
portant unfinished components because of finan-
cial (fiscal space) issues, and a few lack conditions
for financial and operational sustainability.
The country has the two largest inland waterway
systems in Latin America: the Amazon basin and
the waterways in the south that feed into the Rio
de la Plata. Brazil’s 14,000 km of navigable rivers
have a large but underdeveloped potential as car-
riers of products such as grains and minerals. The
coastal shipping trade in bulk goods has increased,
but its share of the cargo market is still marginal.
Given the size of the country, air travel plays an
important role in long-distance passenger travel,
transport of commodities with a high value-to-
weight ratio, and the conveyance of mail. Brazil
has 26 principal airports (13 of which handle in-
ternational flights). Regarding airlines, Brazil has
six major international, 10 domestic passenger,
and three all cargo.
Some Key Issues
• The high cost of long-distance road transport
is a critical issue for a country such as Brazil,
where most freight moves by road. The insuf-
ficiency and poor condition of the road net-
work tends to undermine the physical integra-
tion of the country, and it adversely affects its
long-term economic development.
• Brazil is an urban country (83 percent of its pop-
ulation is urban), and its dozen large metrop-
olises, with populations of more than 1 million,
face mounting urban transport problems. In
some instances, the political, technical, and fi-
nancial capacity of the federal and local gov-
126
ernments is almost overwhelmed by the es-
calating problems of these cities.
• In Brazil’s large metropolitan areas, motorized
transportation harms the environment and
has a high economic cost. The government
has actively sought to reduce the air pollution
caused by motor vehicles. It has integrated
urban planning with air quality improvement
strategies, improvements in commuter rail/bus
systems, installation of centralized traffic man-
agement systems, development of vehicle fuels
that pollute less (Brazil is the leading producer
and exporter of sugar-based ethanol), and the
promotion of nonmotorized transport. How-
ever, much remains to be done in all these
fields.
• At least 38,000 people die each year in Brazil
from traffic accidents; the mortality rate is
among the highest in the world and three to
four times higher than in developed countries.
Accidents are currently the fourth leading
cause of death in the country. The economic
and social costs of traffic accidents are enor-
mous (exceeding $3.3 billion per year).
• The government’s austere fiscal policy over
the past 10 years has been successful in keep-
ing inflation in check and reducing the net
debt of the public sector. Lack of fiscal space,
however, has led to the postponement of basic
maintenance and needed rehabilitation in-
vestments in the transport sector. Only one-
quarter of the federal paved highway network
is now in good condition (down from more
than 40 percent in 1996).2
• A major underlying cause of the problems fac-
ing highway and urban transport is the steady
rise in private automobile use—a long-term pat-
tern consistent with the worldwide trend. In
urban areas, there has been a shift away from
public transportation. According to a recent
study by the Associação Nacional de Trans-
portes Públicos, private cars use 12.7 times
more fuel than buses (per number of passen-
gers per kilometer transported), produce 17
times more pollutants, and occupy 6.4 times
more space on roadways.
• Access by the poor to public transportation is
an issue closely linked to their daily life. The
bus-metro systems generally extend into the
impoverished neighborhoods on the outskirts

of metropolitan regions; they constitute the
main channel for low-income workers to com-
mute to and from work and to reach health cen-
ters and schools. However, a significant share
of the poor population cannot afford the fares.
Thus, equity concerns (providing access and
affordable transportation to the urban poor) are
at odds with sustainability considerations (re-
ducing chronic government deficits and al-
lowing private sector providers to make a
reasonable profit).
Bank Involvement in Financing Brazil’s
Transport Projects
Brazil is one of the Bank’s major clients. Cumu-
lative lending to the country as of June 2005 was
$36.7 billion, a total surpassed only by India and
China (and equaled by Mexico). However, Bank
lending to the country is marginal, relative to the
size of its economy—the 14th largest in the world.
Total Bank loans have averaged more than $1.5 bil-
lion per year since 1998, but they represent only
0.2 percent to 0.3 percent of the country’s GDP.
The Bank has approved 43 loans to Brazil for
projects focused primarily on transportation and
has financed 28 other projects with smaller trans-
port components. But since 1970, total Bank
transport sector loan commitments have fallen
substantially in real terms (while Brazil’s popula-
tion has nearly doubled).
A number of factors have contributed to the
downturn in Bank lending. The government’s
strict fiscal policy over the past 10 years has re-
sulted in drastic cutbacks in budget allocations for
investments in the transport sector and parallel
reductions in expenditures provided by external
loans. Moreover, in recent years, the Bank has
shifted its focus to development policy lending in
support of Brazil’s fiscal and financial reforms.
During 1999–2005, 14 large Development Policy
Loans for a total of $10.5 billion were granted to
Brazil, representing about 68 percent of total
Bank lending to the country (and 94 percent in
2005). However, an underlying reason for the de-
cline in Bank lending can perhaps be found in the
fact that Brazil is now a middle-income country
that is gradually becoming less dependent on de-
velopment bank financing as its access to private
capital markets improves. At the same time, the
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
government still restricts the extent of public in-
vestment in infrastructure.
Main Areas of Bank Support to Brazil’s Transport
Sector
Bank lending to Brazil’s transport sector has pri-
marily targeted two sectors: highways and urban
transport. Bank projects have focused on sup-
porting the implementation and consolidation
of ways to reduce logistics costs at the policy
level (including measures in the customs, port, rail-
way, and road areas). In the road sector they have
aimed at transforming road administrations from
executing to management entities, increasing pri-
vate sector involvement, stabilizing funding for
road maintenance and rehabilitation, improving
efficiency and effectiveness of public spending,
and strengthening the states’ environmental ca-
pabilities to ensure the sustainability of economic
development.
In addition, Bank-supported projects have fi-
nanced rehabilitation and improvement of the
state and federal road networks, as well as im-
provement of municipal road networks, with a
view to fostering regional integration. A recently
evaluated state highway program in Goias State
was designed as an Adaptable Program Loan. It
achieved its goals of increasing the efficiency of
the state road transport system, transferred the
maintenance of municipal roads to the municipal
authorities, and strengthened the executing agen-
cies. Funding for maintenance and rehabilitation
of the federal paved network has increased dur-
ing the present decade but has been insufficient
to halt the deterioration in the network.
In the urban transport sector, much of Bank activity
since 1990 has supported the government’s de-
cision to transfer the urban rail systems from the
federal level to the states and municipalities. Bank
projects have also focused on greater physical in-
tegration and institutional coordination in the de-
livery of urban transport services, including modal
and fare integration. Moreover, the projects have
targeted the benefits of the urban rail systems to
the poor population. This has included the in-
troduction of the vale transporte system (a com-
pulsory requirement on employers to finance part
of the commuting cost of their employees).
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A DECADE OF ACTION IN TRANSPORT
During the past decade, the Bank has been as-
sociated with all of Brazil’s privatization programs
in the transport sector through the provision of
large loans and technical assistance.3
• The Bank supported the privatization of the
federal railways through technical support un-
derpinned by a Bank loan that financed staff
retrenchment. The entire railway network,
comprising more than 28,000 km of rail line,
was concessioned to the private sector during
1996–99. Investments made by the conces-
sionaires in the track and rolling stock during
1997–2005 totaled about $2.3 billion.
• In the road subsector, the federal government
has concessioned about 5,000 km of state high-
ways, and the São Paulo state about 2,500 km.
However, the process was slower after the first
wave of concessions in 1994–95.
• In urban transport, the Bank has supported a
number of projects aimed at advancing the
transfer of the commuter rail systems to the pri-
vate sector as a way to improve their per-
formance, attract new investment, and reduce
the chronic fiscal burden that these opera-
tions represent. Although in some cases (such
as Belo Horizonte and Recife), private sector
control of the commuter rail systems has been
delayed by the fiscal crisis, in general, progress
in the urban arena has had very positive out-
comes.
• Management of all major ports has now been
transferred to the private sector, with the gov-
ernment retaining control of port infrastruc-
ture. This has improved their efficiency and
reduced port fees.
• The Bank has also collaborated with the
government in the formulation of relevant
operational reform policies, including the sep-
aration of the policy formulation and regulatory
functions.
Bank Performance in Supporting the Country’s
Transport Sector
The ratings for outcome, sustainability, and insti-
tutional development of Bank-supported proj-
ects were low for operations carried out during
the late 1980s and early 1990s—years that were
very difficult for Brazil, as they were for much of
128
Latin America (the “lost decade”). With the upturn
in the economy, project performance indicators
improved during the second half of the 1990s
and even more so in 2003–04. Examples of
progress include the pioneering efforts to con-
cession the suburban railways, the subway system,
and the ferry boats in Rio de Janeiro, saving some
$400 million. In São Paulo the suburban railway
that only supported 400,000 riders per day before
the Bank project in 1992 is now transporting 1.6
million people daily.
The relevance of transport sector projects has
been high. The Bank’s analytical and advisory as-
sistance and financial support has been consistent
with Brazil’s current development priorities and
with the Bank’s country and sector strategies.
The efficacy of Bank lending and policy advice pro-
grams has generally been substantial. A few urban
transport projects were seriously affected by the
fiscal space restrictions imposed after 2002, at
least until the Pilot Investment Program was cre-
ated in agreement with the International Mone-
tary Fund (IMF). These developments could not
reasonably have been anticipated at appraisal. An
important lesson for countries affected by fiscal
space problems is that it is essential that urban
transport projects be included in any Pilot In-
vestment Program–type arrangements, as they
are likely to attract strong support because of
their high social benefits.
Overall, groundbreaking achievements were made
in passenger transport integration and in sup-
port of the decentralization of suburban railway
services. The Bank also supported the first busway
project supported by the private sector. The effi-
ciency of Bank-supported projects completed
since 1980 has been generally rated as substantial,
although the economic rates of return (ERRs)
have sometimes been lower than anticipated at
appraisal, again because of the impact of delays
in completing the infrastructure because of the fi-
nancial crisis.
Since 1995, the Bank has produced 11 reports on
Brazil’s transport sector, six general reports that
include transport sector issues, and a number of
policy notes. As lending levels to Brazil’s transport

sector decrease, the relevance of Bank support
to the country will become more dependent on
the quality and effectiveness of its technical
assistance.
In summary, the outcomes of the Bank’s approach
to assisting in the reduction of poverty in Brazil
through the transport sector have been substan-
tially achieved. Project investments were often a
vehicle to support the government in more fun-
damental reforms associated with decentralization,
privatization, and pro-poor urban transport mea-
sures. Maintenance issues, however, especially
with regard to the federal road system, remain a
serious concern.
Country Case Study—India
The Bank has tried to adjust its transport program
to changing portfolio needs as India’s economic
growth has soared.
The Economy and the Transport System
India’s economy is the third largest in Asia, after
Japan and China. GDP per capita, at purchasing
power parity, is estimated at $3,100. India’s pop-
ulation of 1.1 billion is growing at 1.4 percent per
year, and the population is about 70 percent rural
and 30 percent urban. About two-thirds of the
population depends on agriculture for their liveli-
hood, and about 25 percent of the population lives
below the poverty line.
Transport demand in India has been growing
quickly. During 1967–87, total demand for inter-
city freight transport grew at an average annual rate
of 5.3 percent, while GDP grew at an average of
4.2 percent. During the 1990s, freight transport de-
mand grew at 10 percent per year, while the econ-
omy grew by 6 percent to 7 percent. Since 2000,
transport demand has been accelerating. In recent
years this demand has shifted among transport
modes, mainly to the advantage of road trans-
port, which today carries 70 percent of land trans-
port demand. The overall length of the road
network has more than doubled in the last 20
years. Yet only 60 percent of the villages are con-
nected by all-weather roads, and there are large dif-
ferences across the states in village connectivity.
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
There has also been a major expansion of the
ports, with several new container terminals de-
veloped by private operators. Modernization of fa-
cilities and better management also occurred, but
to a lesser extent than in the other transport
modes. India’s transport system remains old, sat-
urated, and poorly maintained, providing low-
quality services. This is because for many years
the transport system has been managed from a
supply-oriented rather than a market perspective.
More than a quarter of the national highways and
more than half of the state highways are in bad con-
dition. The trucking industry, in contrast, is mostly
privately owned and is highly competitive.
The government in recent years has launched a
major program to improve the national highway
system. The program intends to balance the needs
of modernizing the road system with maximizing
the benefits to the whole population. The result
is many widened roads but few really modern
highways. Minimizing the difficulties with land
acquisition and with application of social safe-
guards to affected people appears to be a key rea-
son for the widening approach. It is not obvious
that, given the population already living along the
roads, widening existing roads will result in less
land acquisition or resettlement than construct-
ing new expressways.
Government efforts to open infrastructure to pri-
vate investors starting in the 1990s have met with
limited success in the transport sector. It has suc-
ceeded mainly in the ports and is just starting to
have an effect with airports. Although many small
road projects have been carried out with the par-
ticipation of private operators, they represent a
fraction of overall road investments.
Bank Assistance to the Transport Sector
India today is the Bank’s largest borrower. Lend-
ing for all Bank projects reached $2.9 billion in fis-
cal 2005, more than double the $1.4 billion of the
previous year. The Bank’s assistance is focused on
upgrading infrastructure; improving people’s ac-
cess to social services, especially education and
health; and building rural livelihoods. Lending for
transport projects in fiscal 2005 reached $1 billion,
or almost a third of total Bank lending. Several
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A DECADE OF ACTION IN TRANSPORT
nontransport projects also include transport com-
ponents—mainly rural roads.
Bank lending for transport in India has evolved dra-
matically over the past 20 years. Until the first half
of the1980s, most loans were for railways and
ports; during fiscal 1981–86, 80 percent of the
lending went to projects in these two modes. In
the following 5-year period, road lending increased
to about half of total transport lending. In the
most recent period, fiscal 2001–05, the overall
level of lending for transport increased signifi-
cantly, and the shift toward roads became stronger.
Recent years have seen a rise in the size of the road
projects focused on state networks, with several
loans exceeding $300 million. At the same time,
several of these projects include large compo-
nents for institutional development. The Bank
has supported rural roads through state-specific
or multistate rural road projects, as well as through
agriculture and rural development projects. In
the latter, there were cases where up to 50 per-
cent of the project cost was to improve rural
roads. There is some evidence that the country’s
rural roads are contributing to poverty reduc-
tion. For example, the highest rate of decline in
poverty over the past 20–30 years has been in Ke-
rala, which has one of the highest road densities
among the Indian states.
The Bank’s last direct loan for railways was in
1988. Since then, the Bank did, however, approve
a project that aimed to improve efficiency of rail
transport for containers to serve both domestic
and international traffic. This 1994 project sup-
ported the reform of an offshoot of Indian Rail-
ways (IR). It helped the Bank maintain a dialogue
with IR and provided a role model for other IR
business.
Only one urban transport project has been ap-
proved over the past 20 years. The project, cur-
rently under way, is comprehensive and ambitious.
It aims to improve the efficiency and sustainabil-
ity of Mumbai’s transport system
The last port project was also approved more
than 20 years ago. It helped improve container fa-
130
cilities at the Nhava Sheva port in Mumbai. This
successful operation helped modernize container
facilities at the port (box B.2). Resettlement has
been an important component in nearly all Indian
transport projects.
Bank assistance also included the preparation of
several reports that focused on sector policies
and strategies and on specific topics such as high-
way finance and urban transport. The most sig-
nificant of these is a 2002 report that covers the
whole transport sector. Another useful report is
a comparison of Indian and Chinese highway de-
velopment, railway policies, and management.
Performance of Bank Assistance
Six of the eight projects (six road, one logistics,
and one rail) closed since 1994 had satisfactory
outcomes. Overall, project-financed investments,
including projects deemed unsatisfactory, were
economically efficient, showing a fairly high rate
of return.
There were two projects that failed. First, the
states’ road project was a complex project that in-
volved four states with widely varying imple-
mentation capacities. The project was satisfactorily
implemented in two of the states, Maharastra and
Rajasthan. But in the two other states, Uttar
Pradesh and Bihar, the performance of the pub-
lic works department was weak, and implemen-
tation failed. Second, the national highway project
was unsuccessful because of poor project prepa-
ration, weak implementation capability by the
road agency, and weak capacity of local contrac-
tors and consultants.
Except for the two failed projects, all other proj-
ects were considered sustainable. In contrast,
most of the projects had only modest institu-
tional development objectives and, as a result, had
fairly modest impacts.
Two projects achieved significant institutional
development. The container transport project
succeeded because, as intended, the state-owned
container company became a mixed private-
public company, with a significant private equity
(37 percent, substantially above the original goal).
 A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S

Box B.2: Gradual Incorporation of Private Participation in Indian Port Development

As Indian development policies evolved from having an emphasis
on self-sufficiency in the 1980s to participating more fully in inter-
national trade in the 1990s, concerns arose about the country’s trunk
transport system and the obstacles it posed to trade development.
Most international trade passed through 11 major ports run by
Port Trusts, which provided their own services under close cen-
tral government supervision. Near doubling of trade tonnage over
the 1980s put the ports under severe pressure. To relieve the prob-
lem, increasing attention was given to inviting private participation,
introducing modern management, and relieving government bud-
getary constraints. In 1994 the Ministry of Surface Transport, with
responsibility for port oversight, issued a statement of intention to
seek private participation. In 1996 it issued guidelines enabling the
Port Trusts to lease facilities to private operators (and lease equip-
ment owned by them) and to award competitive BOT contracts for
construction of new facilities on port lands. Perceived weak pri-
vate sector response to these new opportunities led to the offer
in 1997 of various tax incentives and less-restrictive limits on for-
eign financial participation. It also led to the creation of a Tariff
Authority for Major Ports, which was supposed to reassure potential
private investors that they would not find the services they offered
being undercut by the Port Trusts’ own services.
The prime candidate for a first experiment with private partic-
ipation had always been the JNP Trust, whose facilities had been
constructed in the 1980s. Being new, it had no Dock Labor Board,
avoided the more extreme labor tensions characteristic of the
traditional ports, and had relatively modern equipment. A scheme
had been drawn up in 1994 to concession the JNP Container Ter-
minal to the private sector. Doubt among Port Trust members,
however, after consultations with all affected parties, combined
with the advent of a new Minister of Surface Transport more sen-
sitive to labor concerns, led to replacement of this approach with
a concession for construction and operation of a new container
terminal at the adjacent Nhava Sheva site. The tender for this
was launched in December 1995.
In the meantime the Port Trust leased additional equipment from
private sources, as permitted under the 1996 guidelines. The ten-
der was won by P&O Ports (Australia), with whom a 30-year con-
cession for a two-berth container terminal of 600 meters quay
length was signed in 1997.
Nhava Sheva began operation slightly ahead of schedule, in
April 1999, and almost immediately attracted increasing amounts
of traffic away from the JNP Container Terminal. By early 2001 the
facility was regularly handling more than 60,000 20-foot container
equivalent per month, whereas JNP traffic had fallen to less than
40,000. But the Port Trust’s strategy of introducing private partici-
pation through competition rather than takeover (of its terminal)
and its extensive efforts to build consensus among the port inter-
ests, including labor, as to how to respond to the competition
succeeded in spreading the management improvements intro-
duced by the concessionaire at least to some degree to the pub-
lic sector operations as well.
By 2003 Nhava Sheva was regularly handling 100,000 20-foot
container equivalents per month, and JNP’s throughput had dou-
bled to 80,000. Nhava Sheva succeeded in maintaining more even
and predictable levels of service (such as preberthing delays and
ship turnaround time) and generally higher operating efficiency. JNP
improved its practices and increased productivity compared with
earlier years. Whether Nhava Sheva had beneficial effects on
performance of the neighboring traditional Mumbai port is more
questionable, but while the latter’s scores on the standard indicators
of port efficiency remain generally in the lower half among India’s
major ports, they have shown some improvement since 1999.
Despite continuing weaknesses in India’s management of port
services—especially overcentralization of authority in Delhi, but
lack of effective coordination in planning among different (na-
tional and state) ports and between them and other modes (in ad-
dition to the remaining very difficult port labor issues)—the Nhava
Sheva experiment has led to further private investments: by PSA
at Tuticorin in 1998; by P&O at Chennai, Cochin, and Gujarat state’s
private Mundla port; by APM for a third terminal at Nhava Sheva;
by Dubai Ports International at Visakhapatnam; and, most recently,
for a potential hub port on an island off Cochin. An important move
toward decentralization and increased local authority was the
establishment of the Ennore port, newly completed at Chennai in
2001, as a corporate body instead of a traditional port trust.

That led to a very good financial performance.
Second was the technical assistance states’ road
project, because it helped several states substan-
tially strengthen the management of their road
systems.
The ongoing projects seem to be attaining their
development objective, with all projects being
rated as satisfactory. On the other hand, most
projects experienced implementation and dis-
bursement delays, which were large in some

131
A DECADE OF ACTION IN TRANSPORT
cases. As a result, implementation in two of the
projects has been rated as unsatisfactory.
Issues
The following appear to be key issues for the de-
sign of future Bank assistance: (i) the adoption of
appropriate design standards and financial mech-
anisms for the national highway program, which
assumes a very large component of PPPs; (ii) the
need for better integration of rural roads into the
states’ road networks; (iii) the means to continue
a dialogue with the railways and eventually resume
lending; and (iv) the achievement of an appro-
priate transport portfolio mix, to ensure that it
maximizes the Bank’s impact. The most critical
question is the future of urban transport sup-
port, where needs are huge and potential re-
wards high, but projects are complex and resource
intensive. An assessment of the ongoing Mumbai
project should shed more light on this in due
course.
Country Case Study—Tanzania
Bank support to a low-income, predominantly
rural economy is assessed in this case study.
Transport and the Economy
Located on the coast of East Africa, Tanzania, with
a population of 37 million, is one of the most
populated countries of Sub-Saharan Africa. Tan-
zania’s GDP per capita (at purchasing power par-
ity) is about $600. GDP has been growing at more
than 5 percent per year in recent years. About one-
third of the population lives below the poverty
line, and more than 80 percent of the population
is rural.
After decades of economic stagnation partly caused
by a highly centralized economy, Tanzania’s econ-
omy began to turn around toward the end of the
1980s, with the launching of an economic recov-
ery program. Sustained, deeper reforms have taken
place since the mid-1990s and have led to better
economic growth. As a result, during the 10-year
period until 2005, the economy grew at annual rates
of between 3 percent and 7 percent. Despite the
economic improvements, poverty in Tanzania re-
mains deep and pervasive. The rates of poverty and
rural residency are essentially unchanged.
132
Transport bottlenecks are a major hindrance to
economic growth. Key aspects of these bottle-
necks are the poor condition of the road net-
work—more than two-thirds of the roads are not
accessible year round—and constrained capacity
and operations of the country’s railway systems.
The strategic location of the Dar-es-Salaam port,
serving a number of landlocked neighboring coun-
tries, is estimated to give transport (if bottlenecks
are removed) the potential to become the coun-
try’s largest foreign exchange earner, as well as the
largest contributor to Tanzania’s GDP.
Tanzania’s geography, size, diversity, and disper-
sion give roads a special position in the integra-
tion of the national economy. In particular, roads
serve rural areas more effectively than any other
mode of transport.
Tanzania’s trunk and regional road networks are
managed by the road agency TANROADS. While
TANROADS’s roads are better maintained than
those of other authorities, close to half are in
poor condition and are not passable year round.
Despite recent reforms, TANROADS is still far
from achieving the necessary operating and fi-
nancial autonomy that is required to efficiently
manage the road system (box B.3).
Two railway systems operate in Tanzania. The Tan-
zania Railway Corporation (TRC), a 2,600-km line,
was formed in 1977 after the break-up of the
East African Railways. TRC connects Dar-es-Salaam
with Burundi, Rwanda, the Peoples Republic of
Congo, and Uganda. The Tanzania-Zambia Railway
Authority (TAZARA) connects Tanzania and Zam-
bia and is owned by both countries.
As part of the economic reforms, the govern-
ment successfully transferred the container ter-
minal of the Dar-es-Salaam port to a private
operator in 2000, and the port’s traffic, efficiency,
and financial results have improved significantly.
Attempts started about the same time to privatize
the TRC railway encountered more difficulties, but
a concession contract for the transfer of TRC to
a private operator is nearing completion.

Box B.3: Developing Effective Road Maintenance Systems in Tanzania
Like most African countries, Tanzania has waged a long battle to
develop adequate systems for maintaining the road network
needed to serve a large and widely distributed population. The 1994
WDR recommended a dual approach to resolving the road main-
tenance problem—with equal emphasis on reliability in the flow
of funds and efficiency in their use—and cited Tanzania as a best
practice case.
Within a year or two, however, it became clear that institutional
capacities in the country were insufficient to bring the new sys-
tems to effective fruition at the same time as implementing a large
roads investment program. Serious questions arose about major
corruption and misuse of funds in the Ministry of Works.
A new approach was gradually worked out, not fundamentally
changing the directions adopted in the early 1990s, but filling them
out and giving them a much stronger constitutional foundation. De-
cember 1998 saw a road fund formally established—in lieu of the
one created by official declarations of the Finance Ministry in
1991–92. A board of nine persons (including an independent chair-
person appointed by the president, four representatives from the
private sector, and four senior civil servants) was set to run it. On
July 1, 2000, TANROADS (Tanzania National Roads Agency) was
established as a semiautonomous agency of the Ministry of Works
to manage maintenance and development of the primary road
network.
The mutually supportive public and private sector efforts en-
gendered by these arrangements have shown several promising
trends. The road fund board’s extensive monitoring and auditing
efforts help to ensure that user charges to support maintenance
are duly collected and used for the intended purpose. Besides reg-
ular financial audits of recipients (and itself), a major technical audit
was conducted by a Norwegian-South African consortium in
2002–03; it concluded that the board was generally receiving value
for its money and that 90 percent to 95 percent of activities were
achieving the required standard of output.
Annual expenditures for road maintenance, which had risen with
the original road fund from a totally inadequate $10 million or less
at the start of the 1990s to the equivalent of $30 million in 1994–95
and then fallen off with the problems of that period, reached $48
million in 2000–01 and $57 million in 2002–03. The increase came
in part from Finance Ministry acceptance of the increase in fuel
levy recommended by the board for the latter year. Whereas road
works had previously been undertaken almost entirely by foreign
contractors or by force account, from the early 1990s considerable
effort had been devoted to supporting development of local con-
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
tractors, especially for maintenance. Their confidence suffered
severe blows from the unexpected drop-off in funding after 1995,
but TANROADS has resumed training efforts and, in line with gen-
eral government policies, about 90 percent of all road mainte-
nance efforts are contracted out.
The combined effort of TANROADS and the board has yielded
a significant reduction in vehicle overloading (fines for which ac-
crue to the road fund) in terms of both scale and incidence, such
that only 6 percent of the 1 million vehicles weighed in 2003–04 were
found overloaded. Coverage still needs to be extended to other
roads. The long-discussed Road Maintenance Management Sys-
tem was finally established in one zone in 2002–03 and extended
to the other three the following year. The corresponding data col-
lection has been actively under way, with an updated network in-
ventory completed in December 2003 and work on traffic counts
and pavement quality started in 2004.
Trends in overall network condition cannot be established with
a high degree of reliability, even for the primary network, because
of uncertainties as to its actual extent, the predominance of gravel
and earth surfaces subject to rapid change with weather condi-
tions, and the unavoidable element of subjectivity in judgments. The
most valid information available is probably that on the actual
lengths (as opposed to percentages of the varying network assumed
at different times) that were rated “good” or “fair” in regional en-
gineers’ visual inspections. These numbers show relatively little
change in the extent of primary network rated “fair” (from about
9,000 km in 1990 to 10,700 km in 2004) but much sharper growth and
fluctuation in the extent rated “good.” That increased from less than
3,000 km in 1990 to more than 7,000 km in 1993 before falling over
the second half of the 1990s and rising again thereafter to reach
more than 11,000 km in 2004.
Although there is some room for doubt about the validity of the
last figure (because it is much greater than the previous year’s es-
timate even though gravel road maintenance had fallen much
short of the plan in the interim), it indicates that good primary net-
work distance may have increased as much as 8,000 km since 1990
(this can be compared, for order of magnitude, with the increase
of 5,000 km in the same category in the similarly sized country of
Ethiopia between 1995 and 2002).
Among further developments being considered, the most im-
portant may be ensuring the most efficient possible allocation of
the scarce resources available for maintenance. A very impor-
tant initiative by the board has been to start systematic financial
support for maintenance of local roads by allocating 30 percent
(Box continues on next page)
133
A DECADE OF ACTION IN TRANSPORT
Box B.3: Developing Effective Road Maintenance Systems in Tanzania
of road fund resources to district and urban councils, as re-
quired under the law. The board considers that these alloca-
tions are sufficient for maintenance of only about one-quarter of
the approximately 50,000 km of such local roads; those for TAN-
ROADS can cover about half of the 28,000 km for which it is
responsible.
The full inventory of local roads planned will clearly be very im-
portant for identifying rational priorities in use of the expanding re-
sources maintenance badly needs—and in the development of local
capacities for maintenance management, which are still very
weak. TANROADS’s Maintenance Management System will be of
great value to this end, too.
Bank Assistance to the Transport Sector
Tanzania receives approximately $1 billion per
year in international development aid and re-
mains one of the most aid-dependent countries
in the world, relying on foreign donors for close
to half of its public expenditures. For many years,
Bank transport lending was cofinanced by a com-
bination of multilateral and bilateral development
agencies. In recent years, however, the level of co-
financing has radically decreased, largely because
the overall assistance for transport has decreased.
The most recent Bank-supported project, the
2004 road project, is cofinanced by just one bi-
lateral agency that provides a small fraction of
the funding, compared with the Bank’s amount.
Other development agencies also provide fund-
ing for transport, although the number of agen-
cies and the total allocated to transport has been
greatly reduced, compared with a few years ago.
Most agencies are now focusing on the social sec-
tors or on providing budget support.
Bank lending for transport over the past 25 years
has followed an erratic pattern. During fiscal
1981–86, lending was limited to a small port proj-
ect. The highest level of lending was achieved
during the 10-year period fiscal 1986–95, when it
exceeded $50 million a year on average and in-
cluded roads, ports, and railway projects. However,
40 percent of the 1994 road project was canceled,
substantially reducing the Bank’s actual contri-
bution to transport during this period. There was
134
(continued)
The 2003 technical audit of board expenditures also urged
greater use, in the Performance Agreements that the board nego-
tiates each year with the agencies that manage the maintenance,
of clearly defined and objectively measurable indicators of ac-
complishment—and greater readiness to withhold or reduce dis-
bursements when monitoring reports show lack of progress.
Although TANROADS’s effectiveness has clearly benefited from
its more autonomous status and the improved salary structure and
stronger discipline that this made possible, consideration is also
being given to the possible advantages of further increasing its in-
dependence and flexibility for meeting the firm set of overall per-
formance targets agreed with its supervising ministry and the board.
no lending in this sector during fiscal 1996–2000.
During the recent 5-year period (fiscal 2001–05),
lending for transport resumed and has reached
$122 million.
During the fiscal 1981–2005 period, lending for
roads accounted for more than three-quarters of
total transport lending. Most road projects fi-
nanced road rehabilitation. They also provided
technical assistance to the Ministry of Works,
mainly to strengthen its road management and
maintenance capacity.
The last railway project, in 1990, was intended to
help TRC become a commercially viable enter-
prise, operationally efficient and financially self-
sufficient. During implementation, it became
evident that its parastatal framework imposed se-
rious constraints on efficient commercial opera-
tions. In line with the economic reforms, the
objective was changed from helping restructure
to assisting with transferring the railway to a pri-
vate operator. Bank involvement with the TAZARA
railway did not commence until 2004.
Two port projects (in fiscal 1985 and fiscal 1990)
had as their main objectives support of the Tan-
zanian ports agency and expansion and mod-
ernization of its facilities. As in the case of the
railway project, the objective of the last project was
eventually shifted to privatize the container ter-
minal; this was fully achieved.

Transport projects also provided assistance to a
state-owned trucking corporation, a study of
urban transport in Dar-es-Salaam, the manage-
ment of the Air Tanzania Corporation, and stud-
ies for the development of a rapid bus transit
system for Dar-es-Salaam. Public sector manage-
ment projects helped finance the process for in-
volving the private sector in ports and railways and
assisted in the creation of a new transport regu-
latory agency. During the period under review, the
Bank did not carry out formal sector work, either
for the transport sector as a whole or for individual
transport modes. However, internal staff appraisal
reports have generally been thoroughly prepared
and contain much useful information.
Performance of Bank Assistance
Six of the nine transport projects closed since
fiscal 1981 had satisfactory outcomes. These proj-
ects generally achieved their physical objectives,
which were relevant to the Tanzanian economy
and were mostly completed as expected and
within reasonable costs. The economic return
on the project investments was high, and several
projects had returns of over 20 percent.
The reasons for the three project failures (a rail-
way and two roads) varied. The railway project
failed, despite improvements in operations and
infrastructure, because of overambitious goals
regarding improvements in operational efficiency,
financial performance, and the time to complete
transfer to a private operator. The unsuccessful
road projects did not improve the condition of the
roads to satisfactory levels, and the government
showed no commitment to achieve institutional
improvements. The failed railway and 1990 road
projects were deemed unsustainable.
Three projects were considered to have a sub-
stantial institutional development impact: two
port projects and the failed railway project. Pri-
vatization of the last and the substantial progress
toward privatization of the railway were deemed
to have significant institutional impact. In the
port project, performance indicators after priva-
tization confirmed that the impact had been real.
Two transport projects are currently active. One
is a 1994 roads project and the other a 2004 trans-
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
port project. Both projects appear to be meeting
their development objectives and making satis-
factory implementation progress.
Issues
The following appear as being of interest for fu-
ture Bank assistance:
• Funding and autonomy of TANROADS need to
be improved.
• The Bank needs to improve its intellectual
contribution through the preparation of pol-
icy and strategy papers.
• The privatization of ports and (eventually)
rail requires strengthening of the regulatory
systems.
• Port privatization should advance further
by transferring further facilities to private
operators.
Special Study—Ghana Joint Evaluation
of the Road Subsector Program, 1996–2000
In February 1996 the Ghanaian Ministry of Roads
and Transport (MRT) formulated a road sub-
sector strategy. Its principal objective was to clear
the backlog of maintenance on a sustainable,
long-term basis. This initiative was supported by
the donor community,4 and at the 1999 Ghana
Donors Conference the Terms of Reference were
approved and a steering committee formed to
oversee an evaluation of the program.
The objectives of the evaluation were to assess the
achievements of the program, with a particular
focus on sustainability; to identify key issues, con-
straints, problems, strengths, weaknesses, and
successes; and to formulate lessons learned to im-
prove future interventions in the subsector. An im-
portant aspect of the initiative was the fact that this
was a joint, multiparty evaluation between the
donor community and the MRT.
The road subsector program was only partly re-
alized and was assessed as too ambitious for both
the funding capacity of the government of Ghana
and the donors, as well as the absorption capac-
ity of MRT and other agencies involved. Future
donor interventions would remain crucial for the
program’s sustainability; whereas maintenance
135
A DECADE OF ACTION IN TRANSPORT
activities could continue to be funded from road
fund income, new development would require fi-
nancing from external sources. The need for fur-
ther training interventions remained high.
Nevertheless, a sound financial basis for mainte-
nance and rehabilitation works was established
through the Ghana road fund, which has devel-
oped into the main provider for such funds and
became operational in September 1997. Between
1997 and 1999 the number of kilometers of road
in poor condition was halved. Furthermore, the
private sector undertook a large proportion of the
road works, and participation targets were met (ex-
cept for financing). Some progress was also made
toward decentralizing, downsizing, and rational-
izing the road authorities.
The evaluation found that environmental and
safety issues should receive greater attention and
disbursement procedures to contractors needed
to be streamlined, especially through shortening
payment approval procedures. Greater priority
was also recommended for the axle load control
problem.
In a 2005 follow-up study it was reported that the
implementation of the road sector program con-
tinued to be slow. The report identified that future
road programs may be jeopardized if they cannot
clearly indicate their contribution to national de-
velopment objectives such as poverty reduction
through a well-functioning monitoring and eval-
uation system. This could lead to a funding re-
duction because of perceptions by donors
contributing to the Multi-Donor Budget Support
System. Moreover, the need for further institu-
tional capacity building and human resources de-
velopment remained high. The retrenchment
program did not materialize. Staff reductions are
based on attrition, so the pace of change is pro-
tracted. The inability to launch the retrenchment
program leaves the subsector and notably the
Ghana Highway Authority with a staff composition
unfit for the job and a salary burden that restricts
the organization in attracting appropriate staff.
The need for training remains high.
The experiment with greater donor cooperation
was only partially successful. Donors have a vary-
136
ing set of priorities that, although broadly in line
with Ghanaian societal needs, are not “owned” by
the government of Ghana. Problems also stemmed
from different donor procedures for implemen-
tation, monitoring, accounting, and reporting.
The willingness to harmonize these approaches
deserves further exploration, but this is clearly a
serious constraint that needs to be worked
through. This part of the appendix should be read
in conjunction with the box 3.1 in the main text.
Impact Study—Brazil Secondary and
Feeder Roads
This study dealt with feeder roads in Bahia, fi-
nanced through two Bank projects approved in
1976 and 1979. Brazil’s economy had experienced
large swings over the past three decades, with high
growth rates until the mid-1970s, deteriorating
conditions reaching negative growth rates in the
early 1980s, and growth resuming thereafter.
Bahia, one of Brazil’s northeastern states, relies
heavily on agriculture, which represents some
20 percent of the state’s GDP.
In 1976, in support of Brazil’s rural development
strategy, the Bank shifted its lending for high-
ways from trunk roads to feeder roads in an ef-
fort to connect agricultural production areas with
villages and markets. The two projects financed
improvement of 1,500 km of roads, mostly in
clusters or mini-networks, to be built in areas
with good agricultural potential, notably for cof-
fee, cacao, or dairy, but with inadequate infra-
structure.
Study Scope and Methodology
The study grouped the roads financed under the
two feeder roads projects into three regions ac-
cording to their economic activity: the coffee,
cocoa, and dairy regions. Out of the 63 roads fi-
nanced, the study selected 20 roads (forming 15
continuous roads) with a total extension of 410 km.
Neither of the two road projects identified control
roads. Thus, this study focused on changes, qual-
itative as well as quantitative, before and after the
road improvements.
The initial field work was conducted in 1993 by the
lnstituto Sociedade, Populaqao c Natureza (ISPN,
a Brazilian nongovernmental organization), under

IEG’s direction. The ISPN team visited munici-
palities and conducted structured and informal in-
terviews along sample roads. The team also
collected socioeconomic and road data. Com-
plementary field work was undertaken in 1996.
Impacts—Demographic and Regional Context
The roads covered in the study served about half
a million people, about two-thirds of whom lived
in urban settings and the rest in rural communi-
ties. About 20 percent of them were poor: small
farmers, landless farm workers, and urban un-
employed or underemployed.
The coffee region extends over a substantial part
of the state of Bahia that had traditionally grown
coffee on a small scale. In the mid 1960s, Bahia
started to expand its coffee business. The feeder
roads were an essential part of this strategy.
Cocoa was traditionally one of the most important
agricultural products of the state, but the market
was hindered by poor roads. Cocoa trees in the
state are mostly in a tropical forest region subject
to heavy precipitation, making road construction
and maintenance expensive. Cocoa is environ-
mentally friendly, as it coexists well with the for-
est cover.
The dairy region is located in southern Bahia.
Before the feeder road program, only four wheel-
drive vehicles could access the existing tracks,
and then only during the dry season.
Economic Impact
The improved roads helped expand production
of coffee and cacao, especially when they were first
completed. Farmers were able to market their
products more easily and to bring in machinery
and other modern inputs. Later, a severe drop in
the world market price of these two crops dis-
couraged production output.
Production of dairy produce was also affected by
a drop in prices, but to a lesser extent. The im-
proved roads allowed the cocoa and the coffee re-
gions to respond to the collapse in their primary
commodities by diversifying production and mov-
ing into nonagricultural activities.
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
Social Impact
One important impact was the change in land
tenure: the proportion of small landholders in-
creased significantly in all three regions. Other in-
dicators showing significant improvement were
the availability of hospital beds per inhabitant
and school attendance by school-age children.
Yet, because of the lack of control roads, the ex-
tent to which these changes could be attributed
to the roads is uncertain.
Traffic Impact
Overall, traffic on the roads increased substantially,
although it remained below original forecasts.
Traffic increased from 20 to 40 vehicles per day on
most roads in the late 1970s to 100 vehicles per
day in 1996 in 12 of the 20 roads in the sample.
The roads with the higher traffic levels were those
that became integrated with the state road net-
works and that were more important for long-
distance travel.
Environmental Impact
Because road improvement work generally fol-
lowed existing tracks, the environmental impact
of road construction was minor and occurred
mainly in the cocoa region. This was because of
conditions that led to erosion. However, defor-
estation was common in all three regions.
Economic Analysis and Beneficiaries
Lack of agricultural output data and prices made
it impossible to produce the economic analysis at
appraisal, based on induced agricultural pro-
duction. Instead, the study calculated a benefit-
cost ratio based on 1996 traffic and on vehicle-
operating cost savings. Twelve of 20 roads had a
satisfactory benefit-cost ratio.
The initial beneficiaries were the large agricul-
tural producers. The road improvements also
helped improve standards of living and access to
social services. All interviewees in the dairy region
thought that the improved roads brought positive
benefits; only three-quarters thought so in the
cocoa region.
Sustainability
Some 10–15 years after the improvements were
completed most of the roads were still in fair to
137
A DECADE OF ACTION IN TRANSPORT
good condition. About a quarter were in poor
condition. Funding for highway maintenance gen-
erally has suffered during the devolution of re-
sponsibilities from the federal to the state
governments in the 1990s. Liberalization and
growth-oriented policies over the past 10 years
should help make the economic and social impacts
sustainable.
Recommendations
The study makes the following recommendations:
• Feeder road planning could be improved by
considering clusters or mini-networks of roads
fitting into a state and regional development
strategy and by considering social impacts in
addition to economic benefits.
• Environmental assessment and mitigation
measures should be launched at the road-
planning stage.
• Beneficiaries, including the private sector,
should be involved in the process of funding
and managing maintenance of rural roads.
• A simple monitoring system, including periodic
traffic counting and a few selected social indi-
cators, should be set up to facilitate evaluation
of the road investments.
• Research on the benefits from avoidance of
road closures should be undertaken by a Brazil-
ian research center.
Impact Study—Morocco: Socioeconomic
Influence of Rural Roads
Despite sustained urbanization through the 1980s
and 1990s, about 50 percent of Morocco’s popu-
lation remains rural. Rural inhabitants have bene-
fited less from the country’s economic growth
over the past decade than urban dwellers; more
than 70 percent of the poor population lives in rural
areas. This report sought to understand the impacts
that emanate from improving rural roads and how
they influence the agricultural economy and the
social sectors. The intention was to better assess
the long-term value of investing in rural roads.
Methodology
The study assessed the impact of paving and
other improvements financed under the Bank’s
fourth highway project (approved in March 1983
138
and improvements completed between 1987 and
1991) to four rural roads, originally with gravel or
earth surfaces, located in three regions of Mo-
rocco. The study considered impacts on transport
infrastructure and services, the agricultural econ-
omy, the social sectors such as health and edu-
cation, and the environment.
For each of the roads considered, the study com-
pared current conditions with those before the in-
vestments and conditions in the project road
relative to a control road that did not benefit
from improvements over the period of the study.
Data were obtained from extensive surveys con-
ducted at the farm, region, and village levels, and
focus group discussions at these levels helped
interpret the data.
Impacts
On Transport Infrastructure and Services
The most direct impact was elimination of fre-
quent road closures during rainy periods. Other
benefits included reduced vehicle-operating costs;
use of larger, more efficient trucks; increased
road passenger services, especially share-ride
taxis offering frequent service; increased owner-
ship of motorized vehicles, both of cars and trucks;
and greatly reduced time to reach markets and so-
cial services. This improvement was a result of
both better roads and new facilities, whose con-
struction was made possible in part by the roads.
On Agriculture
The study found that in the road project areas
overall volume of production, productivity of the
land, and monetary output increased. Farmers
were able to shift output from low-value cereals
to high-value fruit orchards, thanks to the better
quality and year-round operability of the improved
roads. Livestock production shifted toward pure-
bred cows, also a higher-yield undertaking. The
better access conditions, moreover, resulted in an
increased use of fertilizers and of agricultural ex-
tension services.
Improvements in the agricultural economy led to
related economic changes in workloads and on-
farm employment and the establishment of new

shops. Off-farm employment grew overall by more
than six times in the project zones, compared to
about three times in the control zones.
On Social Services
Enrollment in primary education increased
throughout all areas covered by the study; it in-
creased at a much higher rate in the areas where
the roads were improved than in the control
areas. In parallel, the quality of education im-
proved, as it became possible to recruit teachers
to staff the schools, and absenteeism of both
teachers and students fell.
The rural population also nearly doubled its use
of hospital and primary care facilities, and the
quality of health services was enhanced as the
supply of medicines improved. Health officials
launched a campaign to staff rural health care
centers with a doctor, and health prevention pro-
grams became easier to implement.
Some social impacts were especially large for
women: Girls’ enrollment in primary education tre-
bled over the period; expanded or new maternal
and child care programs were made available and
accessible; and the introduction of butane at af-
fordable prices thanks to better roads dramatically
reduced women’s chores of daily fuel wood col-
lection for cooking and heating. Rural-urban in-
teraction increased through increased family visits.
On the Environment
Changes in transport conditions and in the agri-
cultural economy had both negative and positive
impacts on the environment. Overall, no envi-
ronmentally sensitive areas were put at risk by the
road-improvement projects. Negative impacts re-
sulted from the increased traffic and economic
activity, especially air and noise pollution and road
accidents, as well as the increased used of fertiliz-
ers and other chemicals that may contaminate
the water table. Positive impacts resulted from
the transformation of the agricultural economy—
A P P E N D I X B : B A C K G R O U N D PA P E R S U M M A R I E S
notably, curtailment of extensive goat and sheep
herding that damages the soil cover and increased
tree plantations—and from broader substitution of
butane for fuel wood, the demand for which is
larger than the size of Morocco’s sustainable forests.
Economic Analysis
The study quantified the savings in vehicle-
operating costs compared with the original, un-
paved roads, and the economic gains resulting
from people and freight being able to move at any
time, without the risk of road closures. Social im-
pacts, although real, could not be quantified in the
analysis. The ERRs (between 16 percent and 30
percent) were satisfactory. The analysis, however,
did not demonstrate whether paving was the op-
timal economic solution.
Sustainability of Benefits
Historic trends showing steady traffic growth over
long periods on Morocco’s paved roads suggest
that the stream of benefits is likely to be sustain-
able. The improvement of the agricultural econ-
omy is likely to be sustained, with the possible
exception of the sugar beet planting in the north,
which is uneconomic and may lose its market. The
gains in agriculture are also dependent on gov-
ernment trade and fiscal policies. Social service im-
pacts appear sustainable in view of the high value
assigned to them by the direct beneficiaries and
because of government policies and the increased
funding it is allocating to improve social services.
Recommendations
The study recommended that consideration be
given to (i) establishing a practical rural road
monitoring system, (ii) increasing local commu-
nity participation in rural roads, (iii) introducing
mitigation measures to reduce likely increases in
road accidents, (iv) adopting identification and
evaluation methodologies based on multicriteria
indicators, and (v) reassessing the optimal pave-
ment width for rural roads.
139
APPENDIX C: MIGA SUPPORT FOR TRANSPORT PROJECTS
The Multilateral Investment Guarantee Agency
(MIGA) was founded in 1988 with the mandate to
promote foreign direct investment into develop-
ing countries. To fulfill this mandate, MIGA offers
four products and services: it insures investors
against political risks, which include expropriation,
transfer restrictions, war and civil disturbance,
and breach of contract. MIGA also mediates dis-
putes between investors and governments; pro-
vides technical assistance to help governments
attract foreign investment; and provides infor-
mation on investment opportunities through on-
line services.1
MIGA and Bank Group Strategy
As private sector interest in infrastructure and
transport projects increased in the 1990s (figure
C.1), the World Bank shifted toward comple-
menting private investments with policy and reg-
ulatory reforms and institutional capacity building,
and Bank lending for infrastructure and trans-
Figure C.1: Private Sector Investment in Transport Projects, 1994–2005
25,000
20,000
US$ millions
15,000
10,000
5,000
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: World Bank PPI database.
portation projects declined. Conversely, MIGA
insured its first transport project in 1995, and the
Agency’s guarantee projects in this sector reached
a peak in 2001–2003.
In 2000, MIGA’s strategy set forth the increased fa-
cilitation of complex infrastructure projects as a
priority, citing significant growth in private par-
ticipation of this sector during the previous 10
years and record demand for MIGA’s services.
These projects were generally highly capital-
intensive, had long pay-out periods of 10–20 years,
and often involved concession agreements with
public entities (MIGA 2000, p. 54). Within this
focus on infrastructure, transport projects ac-
counted for approximately 6 percent of new MIGA
guarantees (measured by gross guarantee vol-
ume) each year during fiscal 2001–03, and over
8 percent in fiscal 2006 (figure C.2).2 However, al-
though overall MIGA guarantees for infrastructure
projects have remained strong if somewhat
Year
141
A DECADE OF ACTION IN TRANSPORT
Figure C.2: New Transport Project Guarantees, Fiscal 1996–2006
140
120
100
$US millions
80
60
40
20
0 0.00
1996 1997 1998 1999 2000
Gross liability transport sector
(left axis)
volatile, guarantees for transportation projects
dropped during fiscal 2004 and 2005.
MIGA Portfolio Overview
As noted above, MIGA exposure in the transport
sector has been modest. From fiscal 1990 to fis-
cal 2006, MIGA issued 36 guarantee contracts for
12 projects totaling $424.2 million in this sector
(figure C.2). Cumulatively, this represents 2.8 per-
cent of MIGA historical gross exposure. As of June
30, 2006, MIGA’s active transport portfolio was
$221.4 million, accounting for 4.1 percent of its
outstanding gross portfolio,3 and eight of the 12
projects remained in the portfolio.4
Toll roads accounted for the largest share of trans-
port projects, both in terms of the number of
projects and their guarantee exposure (four proj-
ects, and 51 percent of exposure), followed by
airports/airlines (three projects, 20 percent of ex-
posure), and ports (three projects, 8 percent of
exposure) (figure C.3). Three of the first five
MIGA guaranteed transport projects were toll
roads, but those insured after 2001 were prima-
rily in port and airport/airline projects, followed
by a large toll-road project in fiscal 2006.
142
9.00
8.00
7.00
6.00
5.00
Percent
4.00
3.00
2.00
1.00
2001 2002 2003 2004 2005 2006
Year
Transport sector share of MIGA’s
total new gross liability (right axis)
Consistent with the privatization trends in the
1990s, the large majority of MIGA’s exposure in
transport projects (75 percent of exposure, and
8 of 12 projects) was in Latin America. The re-
maining projects were in Asia (21 percent of ex-
posure and two projects), Africa (3 percent of
exposure and one project), and Europe and Cen-
tral Asia (1 percent and one project) (figure C.4).
MIGA’s transport projects have been concentrated
in middle-income countries (96 percent of ex-
posure). Half of MIGA transport projects were in
lower-middle-income countries, accounting for a
gross exposure of 69 percent. These projects in-
cluded key infrastructure improvements in coun-
tries such as Ecuador, Peru, and the Philippines,
where perceived risk was relatively high and/or in-
vestors required specific coverage to obtain fi-
nancing. Only four percent of MIGA’s cumulative
exposure (two projects) was in low-income/IDA-
eligible countries, including one project in Sub-
Saharan Africa.
While MIGA’s transport portfolio was concen-
trated in Latin America and the Caribbean, and to
a lesser extent in Asia and the Pacific, large pri-
 APPENDIX C: MIGA SUPPORT FOR TRANSPORT PROJECTS

vatizations or public private partnerships in Cen-

Figure C.3: MIGA Gross Expenditure by
tral and Eastern Europe have not obtained MIGA
Project Type, Fiscal 1990–2006
coverage.
Other
Most of MIGA’s transport projects involved com- 21%
plex concession agreements or licenses specify-
ing tariffs, performance benchmarks, and other
parameters critical to the project’s viability. MIGA
appears to have met a demand from foreign in- Ports
vestors, entering a relatively new area for the pri- 8%
vate sector. Roads
51%

Effectiveness of Guarantee Activities

IEG-MIGA carried out ex post evaluations of two Airports/Airlines
MIGA-supported transport projects—an airport fa- 20%
cility and a toll road. Both projects involved the
privatization, modernization, and expansion of ex-
isting facilities where host governments sought
Figure C.4: Issued Gross Exposure by
private financing and management. The projects
Region for Transport Sector Projects,
were designed to meet future increases in de-
Fiscal Years 1990–2006
mand and upgrade outdated facilities to current
international standards in their sectors, and to im-
prove safety. Ultimately, the projects were ex- Latin America
75%
pected to contribute to the host country’s private
sector development and economic growth. The
concession agreements for these projects were
awarded in the 1990s, when private participation
in the provision of infrastructure peaked.

IEG-MIGA’s evaluations have highlighted findings

on project beneficiaries, concession agreements
and the sustainability of the projects, environ-
mental and social effects, and MIGA’s role and
value added in the two transport projects.
Project Outcomes
Both projects helped to transform the deterio-
rating infrastructure into modern facilities de-
signed and equipped with the appropriate
technology and specifications to meet current
international airport and highway standards. The
quality of service has also vastly improved. Effi-
ciency gains were also achieved in both projects,
for instance, by greatly reducing the processing
time for air cargo, benefiting exporters and im-
porters. Similarly, the toll road has considerably
cut vehicle-operating costs, travel time, accidents,
and crime along the highway.
Europe/
Central Asia
1%
Africa
Asia
3%
21%
At the same time, the modernization and privati-
zation of these two facilities means that users
have to pay higher prices for the services, com-
pared with before the privatization, when they
were operated by public sector entities. User
charges have been a contentious issue in both
projects. Actual volume of traffic and revenues are
below expectations for both, although the rev-
enues generated by each project are sufficient to
cover operating costs, accelerated debt service,
and fiscal obligations; in one case revenues also
allowed payment of shareholder dividends.

143
A DECADE OF ACTION IN TRANSPORT
Beneficiaries
The main beneficiary in the airport project has
been the host government, as revenue generation
was the main impetus for privatization, and the
concession agreement reflects this objective. Air-
line passengers—both local and foreign—and air
cargo companies also benefited from efficiency
gains, although the net effect is smaller because
of increased user charges, which are higher than
for comparable airport facilities in the Region.
The impact on the private sector has been limited
because of the structure of the concession agree-
ment, which restricted the entry of other providers.
In the case of the toll road, the host country’s
motivation for privatization was the repair of a
decaying road infrastructure, which was to be the
linchpin of Regional economic revitalization. The
majority of the beneficiaries of the toll road are
middle-income public transportation passengers,
high-income car owners, and commercial users.
The company has also introduced targeted sub-
sidies to low-income transport operators. Gov-
ernment tax revenues have been lower than
expected, as a result of lower traffic volume. That
comes mainly from high tolls, an increase in gaso-
line prices, and an economic slowdown in the
country. Although the owners of public trans-
portation companies, trucking services, and pri-
vate passengers benefit from efficiency gains,
effects on the Regional economy are not yet sig-
nificant. However, some commercial development
of land near the toll road has started.
Concessions and Sustainability of Projects
As noted above, the majority of MIGA transport
projects involved complex concessions or licenses,
and both evaluated projects were covered by
long-term concession agreements. In recent years,
MIGA has been notified about disputes between
its guarantee holders and government entities
related to transport projects. Investors filed two
claims that were related to provisions in the con-
cession agreements, such as tariff rates, allegations
of being in breach of concession agreements, or
outright abrogation of concessions.
The concession agreements in the two evaluated
projects resulted from competitive or solicited bid-
144
ding processes. In both cases, commercial risks
are borne by the project enterprise. Affordability
of tariffs or fees, which are set in the concession
agreements, has been a common concern with
both projects. In both cases, there have been
challenges in sustaining the projects, albeit for dif-
ferent reasons. In the case of the airport facility,
the distribution of revenues stipulated in the con-
cession agreement is not sustainable, and it has
not had the intended impact on the country’s pri-
vate sector development. The concession did not
lead to lower prices for users and has added con-
straints on future competition in the sector. In the
toll-road project, the main challenge is increasing
usage to improve the financial performance and
sustainability of the enterprise.
Environmental and Social Compliance
As required by the concession contract, the air-
port facility has carried out remedial pollution
control works on the project site and set up an
environmental and health and safety manage-
ment system covering all the areas of the site
under its control. At evaluation, it was in full com-
pliance with MIGA’s safeguard policies.
The toll-road project did not fully follow World
Bank provisions for involuntary resettlement of af-
fected people; at the time of the evaluation, an
amended Resettlement Action Plan and Correc-
tive Action Plan were being implemented to ad-
dress these deficiencies. Although these plans
rectify some of the earlier shortcomings, IEG
found that the effectiveness of these plans was low,
in part because of the delays in their execution and
poor design and implementation of the relocation.
MIGA’s Role
MIGA played a particularly important and cat-
alytic role in the airport facility. In the toll road,
its coverage was important, but it came after fi-
nancing was finalized. Also, its value-added was
limited to providing political risk coverage, be-
cause IFC took the lead.
In the airport project, MIGA’s coverage was se-
cured before the lenders provided financing;
MIGA support was instrumental in that it pro-
vided coverage of a performance bond, which
 APPENDIX C: MIGA SUPPORT FOR TRANSPORT PROJECTS
was not available from private insurers on a long-
term basis and was critical for the investment to
go forward. Coverage was also important because
of the uncertain political environment at the time
the guarantee was issued.
Prior Recommendation
IEG-MIGA previously made a recommendation to
MIGA covering its involvement in projects with con-
cession agreements, which is relevant for the two
evaluated transport projects (IEG-MIGA 2006, p.
46). It recommended that MIGA develop rules of
engagement for projects involving concessions
and similar agreements. Considering that MIGA
often gets involved in projects as an insurer after
such agreements have been negotiated and signed,
it needs to satisfy itself that the underlying busi-
ness model, terms given to concession holders, and
tariffs are sustainable and reflect sound economic
policy to ensure a positive development impact.5
145
APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTOR
The International Finance Corporation’s (IFC’s)
IEG reviewed IFC’s investments in the transport
sector between 1990 and 2005. IEG found several
things:
• Between fiscal years 1990 and 2005, IFC
made 125 transport commitments support-
ing projects with a capital value of $14 billion,
investing $2.2 billion for its own account
and mobilizing $1.4 billion of B-loans.1 On av-
erage, transport investments have accounted
for about 6 percent of IFC commitments.
• Since 1998, when IFC made transport a pri-
ority as part of a strategy to support infra-
structure generally, it has succeeded in
increasing its transport investments in ab-
solute terms and as a proportion of the port-
folio. Two-thirds of IFC transport investment
has been in the Latin America and the
Caribbean Region.
• Transport projects have achieved a signifi-
cantly higher proportion of positive devel-
opment outcomes compared with other
sectors in IFC. Their economic sustainabil-
ity, environmental and social impacts, and
contribution to private sector development
have been particularly strong.2
• Though profitable, the returns on IFC’s in-
vestments in transport projects have been
lower than average. This reflects a number
of factors, including IFC’s instrument mix,
slower than expected growth in traffic, strong
competition from other transport operators,
economic crises, and changes in govern-
ment policy.
Transport a Strategic Sector for IFC
Since 1998, IFC has prioritized its support for
transport projects in developing economies. This
reflects the importance of a country’s trans-
portation system for moving goods and people do-
mestically; it also shows it is a prerequisite for trade
with other nations. IFC has helped developing
countries improve their transport systems through
its investments in private sector companies that
provide air, rail, road, and sea transport; port and
harbor operations; and other linked services,
such as warehousing. Through a process of pri-
vatization and/or the award of concession con-
tracts, many of these private companies have
assumed responsibility from governments for up-
grading, operating, and maintaining a country’s
existing transport infrastructure.
IFC Has Increased Its Transport
Investments
In the fiscal 1990–2005 period, IFC supported
transport projects with a total capital value of
$14 billion. As part of its support, IFC committed
$2.2 billion for its own account that was split with
approximately 90 percent as loans and 10 percent
as equity. In addition, IFC raised $1.4 billion in the
form of B-loans from other lenders, a high mobi-
lization rate relative to other sectors. The balance
of project funds was raised by sponsors and other
private investors. Transport investments repre-
sent an increasing proportion of IFC’s portfolio,
accounting for 4.1 percent of commitments in the
period fiscal 1990–95, 6.1 percent in fiscal
1996–2000, and 6.9 percent in fiscal 2001–05 (see
table D.1 and figure D.1). The transport portfolio
is therefore relatively young, a third of all invest-
ments having been committed in fiscal 2003–05.
The proportion of IFC investments dropped be-
tween approval and commitment was much lower
for transport, at 3 percent during the 1990–2005
period, compared with 16 percent for all other
147
A DECADE OF ACTION IN TRANSPORT

Table D.1: IFC Supported a Variety of Projects within the Transport Sector

Fiscal 1990–2005 No. of Total Aggregate Aggregate Aggregate

(in US$ millions) projects project size B-loans IFC loans IFC equity
Airports and airlines 7 797 13 132 15
Passenger and freight rail 16 1,219 136 254 26
Shipping companies 17 973 201 211 52
Transit and ground passenger transport 4 2,043 0 127 10
Oil and gas transport or pipelines 13 1,856 466 244 14
Port and harbor operations 38 2,380 196 453 30
Highway operations (including toll roads) 11 2,433 161 224 42
Other support activities for transport 13 2,095 250 297 37
Storage and warehousing 6 134 8 48 1
Total 125 13,930 1,431 1,990 227

Fiscal 1990–95 Fiscal 1996–2000 Fiscal 2001–05

Subsector No. of Net No. of Net No. of Net
(Figures in US$ millions) projects commitments projects commitments projects commitments
Airports and airlines 0 0 0 0 7 147
Passenger and freight rail 2 26 5 52 9 202
Shipping companies 7 91 2 48 8 124
Transit and ground passenger
transport 0 0 3 100 1 37
Oil and gas transport
or pipelines 8 105 3 87 2 65
Port and harbor operations 8 56 16 147 14 280
Highway operations
(including toll roads) 1 14 8 190 2 64
Other support activities
for transport 1 40 4 109 8 185
Storage and warehousing 1 6 3 25 2 18
Total 28 338 44 758 53 1,122

sectors. Cancellations of commitments were other Regions, although there has been a no-
also lower for transport, at 0.3 percent versus 3.7 ticeable increase in the Europe and Central Asia
percent. Region since 2002.

Two-Thirds of IFC’s Transport Investment
in Latin American and the Caribbean
IFC’s transport portfolio has a strong bias toward
the Latin America and the Caribbean Region,
which accounts for 67 percent of transport com-
mitments, compared with 37 percent for other sec-
tors (see figure D.2). By extension, IFC’s transport
commitments are relatively underweighted in
This pattern of concentration in Latin American and
the Caribbean and more recently in Europe and
Central Asia reflects the progress in these Regions
toward privatization of transport infrastructure
and contracting with the private sector to deliver
transport services. Commensurate with that, they
tend to have a better institutional and regulatory
framework to support private investment in the

148
 APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTOR

Figure D.1: IFC Investment in Transport Growing in Volume and as Proportion of

Portfolio

600 12
Volume of commitments (US$ millions)

Percentage of total IFC commitments

500 10

400 8

300 6

200 4

100 2

0 0
1990 1992 1994 1996 1998 2000 2002 2004
Fiscal year of commitment
B-loans Equity and quasiequity
Loans and quasiloans Percent of total IFC commitments

Source: IFC data.

Figure D.2: Most IFC Investment in Transport in Latin American and the Caribbean

Africa Africa
3% 8%
Asia
17%

LAC
37% Asia
25%
ECA
12%

LAC
67% MENA
1%
MENA ECA
9% 21%
Gross commitments in transport sector Gross commitments in other sectors

Source: IFC data.

Note: LAC = Latin American and the Caribbean; ECA = Europe and Central Asia; MENA = Middle East and North Africa.

149
A DECADE OF ACTION IN TRANSPORT
Box D.1: IFC Supported Brazil’s Port Privatization Program
Brazil’s ports had long suffered from low productivity, high operating
costs, and inadequate maintenance. Handling charges in Brazil were
roughly double that of international ports, and these high charges
and inefficiencies were estimated to cost Brazilian exporters up to
$5 billion per year in lost export opportunities. As part of its program
to increase the competitiveness of the Brazilian economy, the gov-
ernment of Brazil passed a ports modernization law in 1993 that
transferred port administration to state port authorities and re-
quired that the private sector operate the ports. IFC has assisted
in this privatization process by providing funding to the new private
operators for upgrading and expanding port facilities. For example:
• The government-built (and previously unused) container and
• IFC supported the rehabilitation and expansion of the container
terminal at the Port of Rio Grande, following the award of a 25-
year lease in 1997 to a private consortium. IFC helped the com-
pany purchase four cranes, expand the length of the quay, and
repair and upgrade existing facilities. The $50 million project has
enhanced transport logistics for southern Brazil, resulting in in-
creased exports, and created local employment with more skilled
and better-paid jobs. The private operator introduced new tech-
nology and know-how and achieved a 234 percent increase in
productivity over a 5-year period, increasing container moves from
80,000 per annum to over 300,000, well ahead of forecasts.
• The Port of Salvador in the state of Bahia in northeast Brazil was
privatized in 2000 with the award of a 25-year lease to a private
sector (see box D.1). Also, in middle-income coun-
tries generally—and the large economies in Latin
American and the Caribbean and Europe and Cen-
tral Asia are no exception—one of IFC’s roles has
been to help improve the transport sector and
stimulate export-led growth through trade.
As a consequence, 92 percent of IFC investment
in transport has been in middle-income coun-
tries; of that, 72 percent has been to trading in-
frastructure rather than to mainly domestic
transport systems.
Much of Technical Assistance Focused
in Africa
IFC has also supported the transport sector with
technical assistance and advisory services delivered
150
company. IFC arranged funding for part of a $20 million project
to purchase two portainers and container-handling equipment,
paving of the container storage area, and construction of a
warehouse and administration buildings. The private operator
played an important role in increasing overall container vol-
umes by nearly 300 percent between 2000 and 2005. As a suc-
cessful project in a relatively poor and less-developed part of
Brazil, it played a vital role in increasing exports from the Region,
attracting other firms into the area (including Continental, Bridge-
stone, Pirelli, Monsanto, and Ford) and inducing follow-on in-
vestments in local transportation logistics.
steel products terminal of Sepetiba is being operated under a
25-year lease awarded by the Port Authority of Rio de Janeiro
in 1998. IFC is assisting the new private operator in a phased
$140 million redevelopment of the container terminal, includ-
ing the purchase of seven cranes, conversion of an existing dol-
phin berth into a straight quay, and the construction of a rail
connection. Largely because of the intense competitive reac-
tion from the neighboring port of Rio, Sepetiba’s operations in
terms of container moves and profitability have not yet met ex-
pectations. The project has, however, helped reduce conges-
tion at ports across southeast Brazil, and the increased
competition has resulted in a dramatic drop in tariffs for im-
porters and exporters.
by its Trust Funds (TATF) and Advisory Service De-
partments. Between fiscal 1990 and 2005, TATF
supported 39 projects with a total cost of $5 mil-
lion—this was about 3 percent of total TATF ac-
tivity over the period in terms of number and
cost.
Just over half of these projects (40 percent by
cost) were in frontier countries, particularly in the
Africa Region. In contrast to Latin America and the
Caribbean, private participation in transport in-
frastructure in Africa is relatively low. Thus, es-
tablishing the right legal and regulatory framework
is an important precursor to increased private
investment in the future. Typically, TATF projects
were related to privatizations and feasibility stud-
ies on private operation of ports and shipping, air
 APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTOR

transport, and cargo facilities. IFC also completed
13 advisory service assignments in transport, ac-
counting for 16 percent of total advisory activities.
Again, slightly more than half of this advisory
work was in Africa, and nine of the assignments
were in airlines and airports.
Transport Yielded Strong Development
Impacts
Among a sample of 22 IFC transport investments
evaluated between 1996 and 2004, 19 achieved
high development outcomes (86 percent by num-
ber and 75 percent by volume); 15 achieved high
investment outcomes (68 percent by number and
58 percent by volume).3 Fifteen (68 percent by
number) achieved “win-win” outcomes, indicating
that at the individual investment level they made
a satisfactory-or-better contribution to develop-
ment in a country and yielded a satisfactory-or-
better gross profit contribution toward IFC’s fi-
nancial capacity for future development outreach.
These results compare favorably to projects in
other sectors across IFC (see figure D.3).4
The development impacts of IFC’s projects are
evaluated based on multiple attributes of their
contribution to a country’s economic develop-
ment, and ratings are based on a synthesis of their
performance across four underlying indicators:
commercial success, economic sustainability, en-
vironmental and social impacts, and contribution
to private sector development. The evaluated
transport projects supported by IFC have yielded
better-than-average impacts in all four indicators.
In particular, they have made strong contribu-
tions to economic growth; their ERRs have been
substantial and in all cases have exceeded their fi-
nancial rates of return, indicating that they have
generated benefits for other members of society
beyond the project company’s owners and fin-
anciers. On average, for each $1 invested, the
evaluated projects returned $1.50 in financial
benefits and $2.25 in economic benefits.
These projects have also tended to have lasting,
positive impacts on the enabling environment.
An example of such a project is a concession toll
road between two large cities in a South Ameri-
can country. Large economic benefits were un-
locked by upgrading the road and enabling more
efficient commercial transportation between the
two cities, plus improved safety measures resulted
in a significant drop in accident and fatality rates.

Figure D.3: Outcomes of Evaluated Transport Projects Compared with Those

in Other Sectors

86% 58%
1 1
HIGH

2
HIGH

18% 68% 15% 43%

Development outcome
Development outcome

High development High development

High development outcome High development outcome
outcome High IFC return outcome High IFC return
Low IFC return Low IFC return
68% 54%
4 3 4 3

14% 0% 31% 11%

Low development Low development Low development Low development
LOW
LOW

outcome outcome outcome outcome

Low IFC return High IFC return Low IFC return High IFC return

LOW HIGH LOW HIGH

Investment outcome of Investment outcome of
transport projects other projects
Source: World Bank data.

151
A DECADE OF ACTION IN TRANSPORT

Moreover, the project helped improve the struc-
turing and administration of subsequent conces-
sion contracts in the country.
Net Returns on IFC’s Transport Portfolio
Lower than Average
Whereas the development impacts of transport
projects have been strong, the returns on IFC’s
investment portfolio in the sector have lagged
behind those across IFC as a whole. Overall, trans-
port investments yielded a net profitability rate of
0.4 percent, compared with 2.6 percent for IFC
overall (table D.2).5
The lower profitability is due in part to IFC’s trans-
port loan portfolio, which has carried loss reserves
above the IFC average since 2003. It is also due to
IFC having made relatively few equity investments
in the sector when across all sectors on average,
equity investments tend to be the main contribu-
tors to IFC’s profits. Moreover, where transport
projects involve concessions, the complexity of
the contracts and lead time for IFC appraising and
structuring its investment results in high adminis-
trative costs and further pressure on profitability.
Lessons from the evaluated projects provide fur-
ther insights on the pattern of development and
investment results in the transport sector:
• Growth in traffic may be slower than fore-
cast. Traffic or volume forecasts prepared by
sponsors may have an upward bias, possibly as
a result of the competitive pressure to win a con-
cession and possibly to make the project more
attractive to investors. In practice, actual
throughput can be lower than forecast or re-
quire a longer growth period to reach target lev-
els. Hence, the income generated may not be
sufficient to service the company’s loans, and/or
equity income for investors will be delayed (de-
pressing rates of return). On the other hand,

Table D.2: IFC Investments in Transport Yielded a Net Profit

Net profitability rates for investments active in fiscal 1990–2005 Transport portfolio All IFC
(percent of outstanding amounts) (%) (%)
Loan portfolio
Average loan outstanding balance 100 100
Interest received 6.4 7.1
Fees received 0.7 0.7
Loan loss provisions (3.2) (1.9)
Cost of funds (before swap effects) (3.4) (4.4)
Administrative expenses (2.3) (2.2)
Loan net income (1.8) (0.6)

Equity portfolio
Average equity outstanding balance 100 100
Dividend income 3.9 6.0
Realized gains on sold/closed investments 6.0 5.3
Administrative expenses (2.4) (2.4)
Active investments
Current valuation (net of provisions) 8.7 19.4
Original cost or disbursement (7.2) (13.7)
Unrealized gains on active investments 1.5 5.7
Equity net income incl. unrealized gains 9.0 14.6
Total net income including unrealized gains 0.4 2.6

152
 APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTOR
the benefits of improved services, faster jour-
ney times, and increased safety are realized im-
mediately by users and the economy.
• There may be competing transport infra-
structure. Many projects are expected to thrive
by offering new, more efficient infrastructure
and services to customers. Container ports are
a good example of an unexpected and strong
competitive response from existing nearby
ports, which may be state owned or privately
operated. Competition may take the form of
substantially lower—often unsustainable—tar-
iffs or customer tie-in arrangements, and while
it may not last for an extended period of time,
it can adversely affect IFC-supported projects
in the early years of operation and cause fi-
nancial stress. Customers, however, benefit
straightaway from reduced prices and in the
longer term from improved services.
• Concession contracts may not provide the
private operator with the protection envis-
aged. Robust traffic projections and strong
sponsors may not be enough to mitigate the
negative impact of major changes in govern-
ment policy, particularly in a country where the
legal and regulatory framework is not well de-
veloped. Although concession contracts may
allow the private operator to raise charges to
end users to protect it from inflation or de-
valuation, such terms may be unenforceable if
they are politically unpalatable, for example, at
a time of economic crisis.
153
APPENDIX E: BANK TRANSPORT STAFF INTERVIEW RESULTS
A random selection of 36 out of 122 staff (spe-
cialists and task team leaders) was made; 20 from
Washington, DC, headquarters; 16 from Regions.
Regions: All Regions and anchor1 covered.
Dates: Interviews conducted between
August 2005 and February 2006
Assessment of Client Needs (Relevance)
In which countries have you worked in the
recent past? (last 5 years).
Detailed list contains 67 countries, covering all
Regions.
To what extent has maintenance been a
problem in these countries in your
experience?
ROADS: Most interviewees confirmed that sus-
tainability is still a problem; they mentioned weak
funding flows, road funds that were only modestly
successful, weak institutional capacity, lack of gov-
ernment commitment, maintenance based on eq-
uity or political considerations rather than need, and
networks too large for available funds. Positive
trends were experienced in a few countries, and
there has been some success with road authorities,
maintenance management systems, and capacity
building both for governments and contractors. In
Africa the SSATP is believed to have a positive im-
pact. Performance management contracts have had
some success, especially in Latin America (CREMA).
RAIL: Only minor problems reported.
OTHER MODES: Not seen as problem areas.
To what extent has the Bank assisted these
countries in the transport sector through
technical assistance and advisory services?
There is not enough ESW in some cases; techni-
cal assistance is often not done soon enough and
sometimes lacks ownership; technical assistance
from other international finance institutions (IFIs)
(sometimes of low quality and offered on a grant
basis) can be a problem; some countries are well
supported by donors, and in these cases there is
no shortage of funds for technical assistance—but
other countries are comparatively neglected. Ab-
sorption capacity of technical assistance can be an
issue, as is the lack of continuity and institutional
memory. Some respondents felt that institutional
and policy support was relatively less successful,
but good results were reported for procurement.
Most people thought that technical assistance
was more effective when it was linked to invest-
ments rather than when it was a freestanding ini-
tiative. Dissemination of knowledge was often
carried out on an ad hoc basis.
The Bank has a good reputation for high-quality
work and is close but not necessarily at the cut-
ting edge of knowledge in roads. It has a unique
depth of resources and is particularly good at as-
sisting with road financing. The SSATP is seen as
doing good work at the strategic level.
Some countries (Iran, Kuwait) have been more fo-
cused on acquiring know-how and skills.
To what extent has the Bank encouraged
these countries to get involved with the
private sector? Please give examples, if
possible.
155
A DECADE OF ACTION IN TRANSPORT
Concessions were mentioned for several coun-
tries, especially in railways and ports; there were
also a few toll roads. Most concessions appear suc-
cessful, but some respondents mentioned diffi-
culties caused by collusion. Some respondents
noted that key success factors included being in-
volved at the earliest possible stage, having the
capacity to deal with the private sector, and hav-
ing a supportive regulatory framework. The fact
that the Bank can now cover the cost of redun-
dancies in loans is seen as significant. The Bank
has also had successes in assisting the develop-
ment of emerging contractors and phasing out
force account operations and in developing com-
petitive bidding and procurement procedures,
as well as performance maintenance contracts.
In ports there are good opportunities for con-
tracting the cargo handling services. Trade facili-
tation committees involving the private sector
have proved successful.
Public institutional change in Asia is less rapid, be-
cause traditional practices are valued highly and
incremental change is often preferred. The “con-
frontational” style of Western practice (competi-
tive tendering, staff rationalization, and so forth)
is disliked by many.
Bank Approach
General Comments
Some interviewees thought the Bank was too
risk averse, although others believed that a
5-year project horizon was often too short to
achieve meaningful institutional change and that
the Bank should not be too ambitious to achieve
everything in one project.
“Continuity can be important. The Bank should
think very carefully before it stops support to a
borrower because of nonperformance or serious
disagreement. Once we walk away, we lose our
ability to influence, and other IFIs often simply
take our place.”
“Business processes have become more cumber-
some, and task managers have less freedom than
in the past. This is partly linked to decentralization
156
and is complicated by safeguard issues. Greater bu-
reaucracy has slowed decision making and placed
additional burdens on task team leaders.”
“The ‘one-size-fits-all’ approach with procedures
is wrong, but there are signs that this is changing.
You cannot treat Zimbabwe and Poland the same
way.”
“It took longer than expected to reverse the de-
cline in transport infrastructure spending because
until the Country Assistance Strategies were up-
dated, infrastructure was not seen as a priority by
some staff.”
“The Bank should be more prepared to enforce
conditionality, especially where the filling of key
posts is concerned; this is the call of the country
director.”
“We have a special responsibility in small countries
because our impact may be huge, whereas in
large economies our impact is much smaller.”
Eighty percent of Bank-funded transport
projects are road or road related. Do you
agree with this modal split, or should we
be doing more in the other transport sub-
sectors and in urban transport?
Some respondents believed that what the Bank
is doing reflects the needs of the borrowers and
that roads were the Bank’s strength. Other re-
spondents thought the Bank was overly biased to-
ward roads and claimed it had gained a reputation
as a “roads bank” and that certain borrowers went
to other IFIs for finance for other modes.
“We should be doing more in the modes other than
roads, but have we really got a critical mass of
knowledge in these areas? It is interesting that
now we have an aviation specialist; more aviation
projects are being generated. We need to ensure
we have a mix of people with the right experience.”
“We should get involved less in intercity high-
ways and more in integrated rural development.”
“We are beginning to do more rail projects, but
urban transport is neglected—this is unfortunate,
 A P P E N D I X E : B A N K T R A N S P O R T S T A F F I N T E R V I E W R E S U LT S
considering the extent of urban growth
anticipated.”
Several interviewees believed the Bank should do
more in urban transport (especially bus trans-
port) but noted that the preparation of urban
projects takes much longer and the transaction
costs are high. They are more complex, and there
are multiple stakeholders and safeguards issues,
so they are riskier. Yet there is little incentive for
task managers to take on these difficult projects,
so task team leaders will not always promote them.
“We should not try to force our own agenda onto
borrowers. In Madagascar the Bank was keen to
put the clean air issue on the transport agenda,
but this was not a priority for the government.”
Other interviewees claimed the Bank should be
doing more in waterways, ports, logistics, safety,
and air pollution.
Bank Performance (Efficacy, Efficiency,
and Outcome)
Reasons for Project Success
• Innovative projects or aspects of projects
• Commitment and ownership by the clients
• Good supervision by experienced staff and
continuity of team members
• Large impact on peoples’ lives
• Strong leadership by key implementation man-
ager or key politician
• Adaptability to changing conditions
• Good funding streams for future sustainability.
Reasons for Unsuccessful Projects
• Lack of client commitment and ownership
• Too many objectives and design too complex
for capacity of borrower
• Corruption and vested interests
• Political interference
• Implementing agency too inexperienced and
not supported
• Insufficient attention to sustainability issues
• Opposition by affected communities.
How well do we monitor and measure proj-
ect efficiency and outcomes? How could
we do better?
“Some indicators are too easy to achieve and are
not a stretch; others are impossible to measure so
it doesn’t happen. Often there are too many indi-
cators, and they can vary from project to project.”
“We focus too much on the physical aspects rather
than efficiency and outcomes.”
“There is some evidence that economic analysis
is manipulated if the economic rate of return is
not high enough.”
“Indicators should be simple and measurable.”
“We need to improve our monitoring capacity.”
“Our rural indicators are improving, but we need
more work on urban indicators. Compliance is a
problem.”
“We should take more cognizance of the lessons
of evaluation.”
“It is important for the borrowers to have own-
ership of the indicators; they often lack the ca-
pacity to monitor or consider that other priorities
are more important.”
“We should put more emphasis on freight tariffs
as indicators.”
“We need to do more impact assessments, but
they can be expensive.”
“Project objectives should be carefully crafted.”
“The discount rate we are using (12 percent) is
often too high. The Poverty Reduction and Eco-
nomic Management Network sometimes uses 4
percent. The European Bank for Reconstruction
and Development uses 5 percent or 6 percent.”
“There is insufficient understanding of economic
analysis by some transport staff, and results may
sometimes be manipulated to ensure the result
is in the required range.”
157
A DECADE OF ACTION IN TRANSPORT
“Indicators for rural roads should include acces-
sibility and outcome (number of trips), supported
by cost-benefit analysis, the Highways Design and
Maintenance Model, and feasibility studies. Local
access roads are better approached through cost-
effectiveness analysis and ranking.”
“My perception is that we lack experience in some
areas because a number of senior specialists have
retired.”
“There is often a tendency to underestimate costs
and overestimate benefits in the Project Appraisal
Document.”
“Transport strategy should also be measurable,
so that we can assess how well it is being
accomplished.”
“Performance-based budgeting by ministries of fi-
nance can put pressure on transport agencies to
invest in results measurement.”
“In the East Asia and Pacific Region there is a
‘gatekeeper’ who monitors indicators proposed
in transport projects.”
Support for Work
From where do you receive the most support
or advice when you require it, to enable you
to perform your tasks effectively? Indicate
those most important to you.
• Peers (95%)
• Transport anchor (60%)
• Information systems (50%)
• Guidelines/manuals (20%)
• Other: e-mail forums, support staff, Web site
(5%)
• SSATP (75%, Africa respondents only)
• Brown bag lunches and other events (65%)
• Management (35%)
• Formal training (15%).
Summary of Comments
Overwhelmingly, people find support from their
colleagues (peers). The anchor is considered im-
portant, and to a lesser extent management ad-
158
vice, training, brown bag lunches, guidelines, and
systems are seen as helpful. All respondents from
Sub-Saharan Africa mentioned SSATP, but there
were two distinct groups—those who strongly
supported it and those who thought it was not
worth the resources put into it. Other points
raised were as follows:
• Several people criticized the transport Web
site as being out of date (even though it was
steadily being upgraded during the interview
period).
• Three respondents mentioned the poor qual-
ity of support staff.
• The Transport Forum and Transport Learning
Week were seen in a positive light, especially
by staff in the field.
• The e-mail forums whereby comments or ad-
vice were sought are seen positively, and peo-
ple do seem to make use of this facility.
• Brown bag lunches are important to Wash-
ington staff. The country office staffs prefer to
use videoconferencing. It was also mentioned
that field staff could not file directly into IRIS
[an internal Bank database], which led to a
backlog building up of documents to be filed.
• Many respondents referred to a lack of re-
sources in the anchor, which led to fewer think
pieces being produced. The lack of interna-
tional experts to lead thinking in the anchor,
especially in roads and railways (after the de-
parture of Ian Heggie, Lou Thompson, and
Kenneth Gwilliam), was mentioned by several
respondents.
Most respondents preferred to consult with peers
before management for advice unless the query
was of a political or strategic nature. This was
partly due to perceptions that access to manage-
ment is not readily available; the exception was
Latin America and the Caribbean, where man-
agement was often the first choice.
Coordination/Communication with Others
To what extent is it easy to coordinate and
share good practice (scale of 1–5, where 5
is very easy)?
 A P P E N D I X E : B A N K T R A N S P O R T S T A F F I N T E R V I E W R E S U LT S

Average score their workload is too high. In terms of workload,

53 percent said too high, 40 percent said about
Head-
right, and only 7 percent said too low. It was ob-
quarters Field
served that those who responded “too low” had
Between regions in only been with the Bank for a short time.
the transport sector 3.3 2.7
With staff in country Change
offices or HQ if you
are in a country office 3.9 3.9 If you could change the way we do just one
thing in the Bank, what would it be and
With the anchor staff 3.3 2.8 why? (Comments made by three or more re-
With staff in other spondents are shown in bold.)
networks 2.9 2.6 • Greater commitment to change poverty
is necessary, especially in Africa.
With other parts of the • We need to work more efficiently and
World Bank Group smartly. We need smart support staff that
such as IFC and MIGA 2.6 2.2 is knowledgeable about information tech-
nology, and proactive.
Comments
• We need to disseminate more effectively;
The most positive aspect is the strong coordina-
we are all too busy to share innovation
tion between headquarters and the field, with
successfully.
both sides ranking this highest. For other areas of
• We need less pressure on task team lead-
coordination/communication the perception in
ers to improve operational quality and dis-
the field offices is poorer because it is more dif-
semination effectiveness and to ensure we
ficult for them.
stay abreast of developments in our field.
• The anchor needs more funding and
Communication/coordination with other net-
resources.
works or parts of the Bank Group may have been
• We need less micromanagement, and task
scored low in some cases because there was lit-
team managers need to be empowered
tle need for such activity on the part of some of
with more responsibility for decision
the respondents.
making.
Workload • Decentralized staff, such as disbursement
officers in country offices, should have
How much time have you spent away on more responsibility.
missions in the last 12 months? Do you • Perhaps we should work less with Trust Funds—
think your workload is about right, too they are too restrictive.
low, or too high? • We need to make quicker decisions (no
All interviewees averaged 4.0 months on mission; objections).
headquarters-based staff working in Regions av- • More flexibility is required in the appli-
eraged 4.6 months; anchor staff averaged 3.6 cation of the safeguards policy.
months; field staff, 3.7 months; and all staff based • We need more advice, orientation, and help
in Washington, 4.2 months. for new staff.
• We should take road safety more seriously.
Fifty percent of staff spends between 4 and 9 • More people with extensive operational
months on mission, and there is a strong corre- experience are needed.
lation between those spending more than 4 • We need more effective donor harmonization
months away from home and the perception that should be sought.

159
A DECADE OF ACTION IN TRANSPORT
• Ways should be devised to reduce the high
transaction costs in project management such
as vertical integration. If we are to scale up, it
is important to streamline procurement and go
beyond traditional contracting systems.
• The Transport Sector Board should have more
power to intervene when things are going
wrong (others opposed this and thought it
ran counter to the decentralization initiative).
• We should be doing more to help people help
themselves.
• We should not be funding recurrent expen-
ditures.
• We should cut down on support personnel
who do not add value.
• Good technical managers are not necessarily
good administrative managers and may need
further training.
• Reinvigorate thematic groups.
• There are too many reviews, checks, and
balances. In the end they become coun-
terproductive and can reduce productivity.
160
• The budget for project supervision should
be linked to the complexity of the projects
involved.
• It is questionable whether the matrix sys-
tem adds sufficient value.
• Sufficient resources should be provided for
training for country office staff.
• More cross-regional support work should be
encouraged.
• There should be more movement of staff
between the Regions.
• Locally recruited staff should have the same op-
portunities as internationally recruited staff.
• There should be more incentives for Head Of-
fice staff to work in field offices.
• We should undertake more urban trans-
port projects, but this requires greater
preparation resources and perhaps more
specialized staff.
• We should be less prescriptive and listen to our
clients.
APPENDIX F: STAKEHOLDER INTERVIEWS
Interviews with stakeholders conversant with
Bank-supported activities were carried out as part
of this review, complementing the country case
studies of Brazil, India, and Tanzania. The struc-
tured interviews covered current and former
government officials and users and providers of
transport services, consultants, and academics.
The main findings are reported below.
Brazil
Analysis of the respondents’ answers suggests
the following conclusions:
• The Bank’s actions, in terms of supporting en-
vironmental sustainability and providing safe-
guards for the people affected by new projects,
had the highest number of very positive
answers.
• Answers with a large proportion of “omitted,
undecided” were analyzed for the questions
about incentives to private participation, knowl-
edge dissemination, procurement/tendering
procedures, and affordability/accessibility for
the poor.
• Capacity building was one of the least criti-
cized consequences of the Bank’s actions. In
contrast, the answers showing the highest
degree of dissatisfaction referred to the ques-
tions about knowledge dissemination, incen-
tives for private participation, and procurement/
tendering procedures, in descending order of
importance.
Generally, the respondents had a positive view of
Bank actions in Brazil. Some areas of a more spe-
cific nature are:
• The relevance and timeliness of Brazil’s trans-
port sector projects
• The anticipation of good results from privati-
zation, especially in the railway sector
• The Bank’s influence in project and institu-
tional integration and coordination
• The need to coordinate construction and main-
tenance aspects of projects
• The importance of technical advice and skill
building
• The implications of subway/metro financing
in less-than-optimal contexts (Recife, Belo Ho-
rizonte, Porto Alegre, and so forth)
• The peculiarities of developing countries, vis-
à-vis the context of the developed economies
• The need to consider all aspects of sustain-
ability, including economic, political, techno-
logical, social, and environmental
• Inadequate coordination among projects/
institutions over time
• The fact that environmental concerns are an
issue that is now being addressed in Brazil
• The lengthy Bank approval process
• The limited capacity of states and counties to
assume debt
• The oligopoly that has been created with re-
spect to the Bank’s knowledge and loan ap-
proval process
• The need for greater publicity about the Bank’s
role, norms, and requirements
• The use of overly optimistic data on population
growth and transport demand
• The importance of targeting assistance to
medium-size cities and less-costly projects
• How IMF demands for public debt reduction
affect the financing of transport projects.
161
A DECADE OF ACTION IN TRANSPORT
India
The main findings from the Indian stakeholders
were as follows:
• The presence of the World Bank in the transport
sector has had a significant impact. However, this
has remained largely confined to the area of road
development. The impact on the transport sec-
tor as a whole has been less pronounced.
• Bank project objectives have been fairly con-
sistent with the country’s development ob-
jectives. The absence of an effective mechanism
at the national level for coordinating the sector
needs and priorities has been a major han-
dicap in taking a holistic approach for the bal-
anced development of the transport sector.
• Bank-assisted projects have focused primarily
on increasing the carrying capacity of roads
rather than on improving transport sector man-
agement. Yet important achievements include
creation of a valuable database for the road net-
work; creation of Road Development Boards in
a number of states; improved construction
methods and maintenance practices; stream-
lined procurement and allied practices; emer-
gence of alternative funding strategies, including
public private participation; adoption of the In-
ternational Federation of Consulting Engineers’
document and large contract packages. The
latter have helped the local construction in-
dustry develop.
• Weak links are urban transport and intermodal
efficiency. These should be given more atten-
162
tion. Dissemination of Bank knowledge in this
area is inadequate.
• Bank processes are complex and result in long
lead times.
Tanzania
The main findings were as follows:
• Bank-funded projects have substantially helped
improve port and road operations and man-
agement. Bank support of the railway was lim-
ited to mitigating operational problems without
providing a sustainable solution so far.
• Stakeholders from both the public and the
private sectors appreciate the Bank’s support
for a greater involvement of the private sector
in the provision of transport services. However,
some stakeholders cautioned that privatization
should be done carefully, as the country does
not have an adequate social safety net.
• The Bank has not been effective in dissemi-
nating its know-how. Bank experts are very
knowledgeable but meet and share their ex-
periences with few people. Stakeholders do not
see regular publications and newsletters. The
Internet is not accessible by many.
• There were conflicting views about the Bank’s
procurement system. Some stakeholders felt
that tendering procedures are cumbersome,
not well understood, and time consuming.
However, others commended the procedures
and felt that they help one get value for
money.
APPENDIX G: BANK DOCUMENTS AND TRANSPORT SECTOR BOARD ACTIVITIES

Distribution of Bank Transport By Region

Documents by Mode, Theme, and Region
By Transport Mode
Among the sample of Bank papers/reports, 26
percent address sector-wide issues in transport,
and 24 percent focus exclusively on roads, 14
percent on urban transport, and 11 percent on
transport infrastructure in general.
By Theme
Nearly 25 percent of the sample related to broad
policy/strategy; followed by finance, 15 percent; pri-
vate sector development/commercialization, 11
percent; poverty, 9 percent; regulation, 9 percent;
institutional development, 6 percent; and eco-
nomic impact, 6 percent.
Nearly 55 percent of the sample addresses issues
common to all lending regions. Africa is addressed
exclusively in 13 percent of the reports, followed
by Europe and Central Asia in 10 percent, Latin
America and the Caribbean in 9 percent, East Asia
and Pacific in 8 percent, South Asia in 6 percent,
Middle East and North Africa in 1 percent, and de-
veloped and other countries in 4 percent (table
G.1). Of the approximately 60 reports that relate
to specific countries, the highest numbers are
for Brazil and India (six each), followed by China
(four), Vietnam, Poland, and Argentina (three
each), Mexico, Indonesia, and Ghana (two each),
and one each for 20 other countries. Forty other
reports address more than one country.

Table G.1: Distribution of Core Transport-Related Papers/Reports (Total~200)

Transport mode/emphasis % Theme % Region %

Sector-wide 26 Policy/Strategy 25 AFR 13
Roads 24 Finance 15 EAP 8
Railways 6 PSD 11 ECA 10
Ports 5 Poverty 9 LAC 9
Rural transport 8 Regulation 9 MNA 1
Urban transport 14 Institutions 6 SAS 6
Trade and transport facilitation 1
⁄2 – 3 Economic impacts 6 All regions 55
economywide issues, aviation, each Technical issues 5
inland waterways Regional issues, transport servies, <3
environmental issues, others each
Source: World Bank data.
Note: AFR = Sub-Saharan Africa; EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MNA = Middle East and
North Africa; SAS = South Asia.

163
A DECADE OF ACTION IN TRANSPORT
Transport Sector Board Activities
Transport Sector Board
This Board has an overall responsibility for trans-
port in Bank operations. Its core responsibilities
include the development of sector strategy and re-
lated operational policies, including operational
procedures and guidance to staff. It is also re-
sponsible for broad oversight of the quality of
operational work, human resources, and part-
nerships, as well as learning and knowledge man-
agement. The Board sponsors or cosponsors
various events for the purpose of learning, ex-
changing information, and supporting strategy
formulation. Typical events include the following:
• Transport Forum. These Forums have been
regular annual events in Washington, DC, bring-
ing together staff from all Regions. Selected
leading experts in the transport sector from out-
side the Bank participate, according to the
chosen theme for the forum. Transport Fo-
rums have received high ratings from partici-
pants in terms of learning and professional
development. Transport 2005 was held March
7–11, 2005, with the overall theme being “The
Role of the Private and Public Sectors in the Sup-
ply of Transport Infrastructure and Services.”
• Transport Learning Week. This is held annu-
ally often following the annual Transport Forum
and is an opportunity for staff in the transport
network to acquire new learning or to refresh
their skills and remain at the cutting edge of
sector knowledge.
• Annual “State of the Transport Sector” Meeting.
These meetings provide an opportunity to
share information from the Regions, the anchor,
and transport staff in other units on work plans
at the beginning of the financial year. Staff have
found them useful for communication across
Regions.
164
• Brown bag lunch series on transport sector is-
sues. These are informal meetings organized
by staff members to exchange ideas and share
learning on transport topics of interest. At least
eight are held during the year; they are nor-
mally well attended by transport staff.
• Courses and workshops. A number of internal
and external courses and workshops are held
throughout the year, depending on identified
needs and demand. Typical courses are on the
use of economic evaluation models; poverty
and transport; and project implementation,
supervision, and monitoring.
• Formal staff training. Although formal train-
ing is customized to the needs and aspirations
of individual staff members, some courses have
been recommended as particularly useful learn-
ing opportunities, such as the Senior Road
Executives Program at the University of Bir-
mingham in the United Kingdom. Funding is
also set aside annually by the Board for such
formal training, which typically comprises a
contribution toward fees or travel but does
not cover time costs.
• Thematic groups work program. Important re-
cent outputs have been updates of the port re-
form toolkit, urban transport toolkit, and rail
privatization database. There has also been
work on poverty impact measurement and
distributional issues of transport interventions.
Also, some tasks in the social responsibility
area have been completed; this area was con-
strained by a very small budget. Other out-
puts included inter alia a Technical Note on
road asset management, a Transport Note on
PPP in highway development, and work in the
aviation (strategic partnership with ICAO) and
road safety fields. In the latter case, the work
has been partially funded through the Global
Road Safety Facility.
ENDNOTES
Chapter 1
1. The estimate for the transport contribution of
global GDP includes transport services, infrastructure pro-
vision, and management. Indirect contributions through
energy use and vehicle manufacturing are excluded.
2. Information pertaining to IFC is taken from ap-
pendix D, which has been published separately (IEG
2007).
3. Numerous econometric studies have identified
the significance of efficient transport studies support-
ing economic growth. See, for example, Dunkerley
and Hine (2001), for a review of macroeconomic evi-
dence. Also The World Development Report (World
Bank 1994b, p. 15) gives a perspective on economic re-
turns from infrastructure investment. More recent
work can be found in an article by Dollar and Kraay
(2002).
4. The concept of poverty is multidimensional. It is
not only related to a low level of per capita income, but
also to many other conditions, such as malnutrition, ill
health, illiteracy, and lack of access to basic services. For
an overview of various studies, see Liu (2005).
5. As of the cut-off date, 23 projects were not yet
evaluated.
Chapter 2
1. Other relevant initiatives that have provided fund-
ing for transport projects include the Public Private
Infrastructure Advisory Facility, the Global Partnership
for Output Based Aid, the Cities Alliance, and the Global
Environment Facility.
2. From its inception, the Bank has provided sup-
port to the transport sector. Before 1960 two-thirds of
Bank lending for transport was concentrated on railway
and waterborne transport, mainly in loans to Japan
and Europe for equipment replacement and recon-
struction following World War II. After that, the emphasis
shifted to new infrastructure in developing countries,
many of which had recently gained independence. In
1972 the Bank reviewed its transport strategy and
shortly afterward began to focus more on institutional
reform. The Bank played an important role in the con-
cessioning of the railways in Argentina but was less
successful with railways in Pakistan and ports in Brazil,
where government commitment to reform was weaker.
During this period, highway sector lending was in-
creasing steadily, so that by the late 1970s it accounted
for two-thirds of the Bank’s portfolio. However, by the
early 1980s, misgivings arose about the failure to ade-
quately maintain many of these roads. In a 1988 policy
paper, “Road Deterioration in Developing Countries:
Causes and Remedies” (World Bank 1988), the Bank es-
timated that substantial road infrastructure had been
lost because of inadequate maintenance in 85 devel-
oping countries. This led to greater focus on rehabili-
tation and maintenance as well as institutional reform
by both the Bank and other concerned agencies. A
number of fiscal crises had also reduced the resource
base for transport sector funding, and this led to new
financial instruments such as sector loans within multi-
year public investment programs and, later, sector ad-
justment loans directed to addressing sector policy
and management issues. An IEG review of rural road
maintenance (IEG 1992) recommended more use of
road maintenance optimization models and better
monitoring and evaluation of such projects. Urban
transport lending began in the mid-1970s with an em-
phasis on traffic management and the development of
public transport. In some Latin American countries
radical measures to give buses priority over private
cars were successfully implemented, and this was doc-
umented in the Bank’s “Urban Transport Sector Policy
Paper” (World Bank 1986).
3. Public administration includes central govern-
ment and general public administration, pensions and
unemployment insurance, law and justice, compul-
sory health finance, and subnational government
administration.
165
A DECADE OF ACTION IN TRANSPORT
Chapter 3
1. The only high-income country is the Republic of
Korea, which was severely affected by the Asian finan-
cial crisis. Some oil-producing states such as Kuwait and
Iran are more focused on accessing technical knowledge
than on investment funding.
2. In the last 20 transport PPARs sustainability was
downgraded from the ICR assessment in 20 percent of
cases and upgraded in 5 percent.
3. Some comparative figures for road projects in
other multilateral organizations are Inter-American De-
velopment Bank, 82 percent; Nordic Development Fund,
85 percent; and Asian Development Bank, 87 percent.
4. The consequences of neglecting maintenance
are outlined in the World Bank Operational Guidance
Notes, TRN-4 June 2005. As an example, the South
African National Roads Agency Ltd. has estimated that
deferring a repair for 3 years costs six times as much
to fix than if it were carried out immediately. If the re-
pairs are deferred for 2 more years, repair of the road
will be 18 times more expensive than it would have been
5 years earlier, when the maintenance was actually re-
quired. Minor defects, such as a blocked drain, if not
attended to can result in the complete failure of a road
section.
5. The expression of commitment was usually made
through a Letter of Intent or Statement of Policy.
6. Regional cooperation between these institutions
in the transport sector includes the Asian Develop-
ment Bank and the Japanese Bank for International Co-
operation and Development in Asia; the Inter-American
Development Bank in Latin America; the European
Bank for Reconstruction and Development; the Euro-
pean Investment Bank (EIB) in Europe and Central
Asia; and the Islamic Development Bank, EIB, and the
Arab Fund in the Middle East and North Africa. In Sub-
Saharan Africa a number of donors are involved both
on a project basis and through the SSATP Program, in-
cluding the African Development Bank and a number
of bilateral agencies from Europe and elsewhere.
7. Program-based approaches apply the same ap-
proach and philosophy as sector-wide approaches but
are more flexible in application in that they can apply
to any coherent program, beyond the conventional
notion of a sector, and range in scope from the micro
to the supranational levels. In all cases high levels of
donor and country coordination are necessary to
achieve program goals.
166
8. The review also considers selected presentations
by Bank and outside experts made in conferences, and
Transport Forums conducted by the Bank’s Transport
Sector Board.
9. The count of reports has been generated from the
World Bank’s ImageBank—the Web-based electronic
repository of Bank documents using the search options
of “transport” for sector, “1995–2005” for the time pe-
riod, and “Publications and Research” and “Economic
Reports” for document type. This count could be un-
derstated if staff has not been diligent in filing docu-
ments in the official system.
10. The Quality Assurance Group (QAG) of the
World Bank conducts annual assessments of economic
and sector work covering sector reports and economic
reports.
11. Sector reports with primary focus on transport
covered by QAG’s Quality of ESW Assessments: Russian
Federation: Transport Strategy Update (fiscal 1998);
Chad: Transport Sector Strategy; Guinea: Transport
Poland: Transport Strategy (fiscal 1999). No transport
sector reports were included in the fiscal years 2000,
2001, and 2002 assessments.
12. The course on Privatization and Regulation of
Transport Infrastructure Services held in April 2001 re-
sulted in a 44 percent increase in learning by the par-
ticipants based on the level-two test administered to
them.
13. Perhaps the most notable is the University of
Birmingham (United Kingdom) Senior Executive
Program.
14. Interviews with transport specialists revealed
that many are so busy that they often do not even have
the time to keep up with the latest knowledge in their
own fields of expertise. Some also made a plea for
stronger ties with research institutions and more joint
initiatives with other sectors.
Chapter 4
1. The four main variants of PPPs are joint ventures,
leases (under which a private party operates equip-
ment or facilities leased from the public sector), and two
types of long-term concession, normally referred to by
the acronym DBFO (design, build, finance, and oper-
ate) or BOT (build, operate, and transfer). The main dif-
ference between the two is that under the latter, the
concessionaire raises revenues directly from users of the
services, whereas under the former, remuneration

comes from the government budget as users receive the
services. All four partnership variants involve private cap-
ital financing, normally raised against the security of the
cash flow to be generated by the services provided.
They usually also involve at least some degree of gov-
ernment capital contribution (for example, in the form
of land or existing facilities made available to the private
operator).
2. The PPI database can be found at http://ppi.world
bank.org.
3. Investments recorded in the PPI database repre-
sent commitments and are invariably overstated. Many
projects lapse or investment commitments are subse-
quently renegotiated downward. The total investment
recorded also includes the sometimes significant por-
tion of public sector investment committed by gov-
ernment or sourced from international financial
institutions.
4. Analysis of Chilean Central Bank data is reported
in Sharp (2005).
5. Freeports or entrepôt centers are focused on in-
termediary trade and transshipment. Goods in such cen-
ters are often duty free and reexported after value has
been added to the products locally.
6. IFC finances only a portion, usually not more than
25 percent of the cost of any greenfield project. Most
IFC-financed projects require other financial partners.
One way in which the IFC mobilizes private sector fi-
nance is through the sale of participations in its loans;
this is known as the B-loan program. More than 190 com-
mercial banks and institutional investors currently par-
ticipate in this program. Other sources are sponsor
equity loans, investments by local banks, technical part-
ners, and other local and international investors.
Chapter 5
1. Sunk investments are costs that have already been
incurred and that cannot be recovered to any significant
degree.
2. The budget approach is the most used world-
wide, especially in Europe. Road expenditures, includ-
ing maintenance, are considered public expenditures that
need to be covered by the national budget, and in many
countries this extends to regional and local budgets as
well. Except when roads are congested, roads are a
public good to be financed out of general taxation. Fuel
taxes, vehicle registration fees, and other levies are
taken as general taxes that finance the budget. Alloca-
ENDNOTES
tion of the budget to the road sector results from a po-
litical process that assigns priorities and permits flexibility.
3. The road fund approach is used in the United
States, Japan, New Zealand, and many developing coun-
tries, especially in Africa. Road users pay user charges,
mainly in the form of a fuel levy. Revenues from these
charges are, in principle, allocated to road expenditures,
especially maintenance. The users-pay approach pos-
tulates that the allocation of resources will be more cost
effective and road works will have lower unit costs
than under the budget approach.
4. Early road funds in the late 1970s and early 1980s
were of the first-generation type, merely a line in the
national budget labeled as a road fund.
5. The IMF, while expressing reservations, agreed to
review the merits of road funds on a case-by-case basis
and to strive for closer coordination in cases where dis-
agreements arose.
6. The leaders of the African Development Bank,
Asian Development Bank, Inter-American Develop-
ment Bank, EIB, European Bank for Reconstruction and
Development, the IMF, and the World Bank met on Feb-
ruary 18, 2006, to discuss a joint approach to the prob-
lems of corruption. They agreed to standardize the
definition of corruption, to improve consistency of
their investigative rules and procedures, to strengthen
information sharing, and to ensure that compliance and
enforcement actions taken by one institution are sup-
ported by all others.
7. The lead for the audit came from an earlier in-
vestigation into allegations of abuse of consultant trust
funds; three Bank staff were terminated and 11 com-
panies debarred.
Chapter 6
1. See http://1nweb18.worldbank.org/oed.
2. See http://www.princeton.edu/~ina/images/
infographics/transportation_big.jpg.
3. However, as the IEG evaluation update of heavily
indebted poor countries points out, debt reduction
alone is insufficient to ensure debt sustainability and im-
proved net transfers for poverty relief. Additional sup-
portive measures by both governments and external
partners are usually necessary.
4. The Bank has used two criteria to define fragile
states: a per capita income falling within the threshold
of IDA eligibility, and performance of 3.0 or less on both
the overall Country Policy and Institutional Assessment
167
A DECADE OF ACTION IN TRANSPORT
rating and that rating for Public Sector Management and
Institutions.
5. See http://www.transparency.org.
6. The African Capacity Building Foundation is an in-
dependent institution in Harare, Zimbabwe, that pro-
vides grants to national and regional institutions and
programs to help strengthen economic policy analysis
and development. It was established in 1991 by the
Bank, together with the African Development Bank, and
the UN Development Programme.
Chapter 7
1. Early projects from the first two QAG exercises were
excluded because they contained no narrative com-
mentary explaining the scores of the rankings assigned.
2. There has been some attempt to look at the dis-
tributional effects of urban rail projects in Brazil (Re-
belo 2004), but further research is needed. The issue
of the wider impacts and multiplier effects is more
complicated than it appears at first. Within the Bank ear-
lier work attempting to estimate total national income
increments associated with rural road investments was
found to be too difficult to apply as a formal appraisal
tool, partly for data and forecasting reasons and partly
because it concentrated on physical outputs rather
than service accessibility. But there is also the more fun-
damental theoretical question of whether the extent to
which and the circumstances in which the measured
user benefit understate the true total benefit. The work
of Burgess and Venables (2004) has taken the issue for-
ward a little in empirical terms. The multiplier effect is
a quite different issue concerning macroeconomic con-
sequences and depends largely on the overall level of
employment of resources in the economy.
3. A few “outlier” ERRs were removed from the
sample. For example, there were instances of small
junction improvements that would have an extremely
high ERR but would distort the overall picture.
4. Some countries now use 12 percent.
5. On April 24, 2004, the Inspection Panel received
a Request for Inspection related to the India-Mumbai
Urban Transport Project. This request was submitted
by the United Shop Owners Association on behalf of
118 residents of Mumbai who claimed to be adversely
affected by the project. This was accentuated by a fur-
ther submission on June 24 by three nongovernmen-
tal organizations on behalf of a further 350 residents
from a separate neighborhood. On June 29, 2006, IBRD
and IDA restored India’s right to make withdrawals
168
from the loan and credit following compliance or sig-
nificant progress on the conditions under the suspen-
sion of disbursements.
Chapter 8
1. Another example is the Oslo toll cordon in-
troduced in the early nineties, which has contributed
to reducing traffic and financing new roads and
“environmentally friendly” tunnels under the downtown
area as well as new public transport infrastructure.
2. See http://www.ieta.org/ieta/www/pages/
download. php?docID=174.
Appendix A
1. The World Bank Regions are Sub-Saharan Africa,
East Asia and Pacific, Europe and Central Asia, Latin
America and the Caribbean, Middle East and North
Africa, and South Asia.
Appendix B
1. When parts of the former London Transport were
sold and route franchises were competitively tendered,
costs per bus-km were halved in real terms between
1985 and 1997. Cox and Duthion (2001) record that an-
nual traffic reached an all-time peak of 1.3 billion pas-
senger journeys in 2000. This has been substantially
boosted by the introduction of the central city access
charge for cars in 2003.
2. In 2005 the government, with the support of the
Bank, embarked on a major highway maintenance and
rehabilitation program. The program has been assigned
pilot project status under a special arrangement with
the IMF that allows expenditures allocated to high-
priority projects to be excluded from the estimate of
the government’s primary fiscal surplus, thus freeing
them from binding financial constraints.
3. The experience of Brazil and other Latin Ameri-
can countries in privatizing public transport services has
shown that concessioning will not suffice. The coun-
tries with the greatest success in attracting private in-
vestment during 1996–2001 (Chile, Colombia, and
Bolivia) were precisely those in which overall public in-
vestment in infrastructure as a percentage of GDP has
remained high.
4. The participants in the Ghana road sector evalu-
ation were the Japan Bank for International Coopera-
tion, Kreditanstalt für Wiederaufbau, the EU, the Dutch
government, Arab Bank for Economic Development in
Africa, Organization for Petrol Exporting Countries,

USAID, African Development Bank, World Bank, and
Danish International Development Assistance.
Appendix C
1. In 2005, approximately 4,200 transport or logis-
tics items made up 13 percent of total on-line invest-
ment information content.
2. The share of MIGA guarantee gross exposure is-
sued per fiscal year for infrastructure projects overall
increased from an average of 17.6 percent (1995–99)
to an average of 31.7 percent (2000–06).
3. Overall, the infrastructure sector accounted for
41 percent of MIGA’s outstanding portfolio.
4. One project in the transport sector was cancelled
by the clients because of a disagreement with MIGA.
MIGA, the sponsors, and the senior lenders could not
agree on technical legal issues surrounding the secu-
rities pledge. MIGA terminated guarantees for another
project related to nonpayment of premium by the
guarantee holders. This termination occurred within 6
months from issuing the contracts of guarantee.
5. Many of these issues are reflected in MIGA’s
Guidelines on Assessing the Development Impact of Op-
erations Supported by MIGA Guarantees (2004), which
contains a section on assessing operations where the
public sector is the client.
Appendix D
1. When IFC syndicates a loan, IFC is the sole con-
tractual lender, acting on behalf of both itself and so-
called B-loan participants. Participation agreements
are signed between IFC and each participating finan-
cial institution in the B-loan. The participant’s rela-
tionship with the borrower is therefore indirect through
IFC, with IFC as the sole lender of record and admin-
istrator of the loan. The participants’ involvement,
however, is known to the borrower and is included in
any publicity for the transaction.
ENDNOTES
2. Each year, IFC’s investment departments evalu-
ate a random sample of investments that have reached
early operating maturity and rate each operation on nine
indicators. IEG independently reviews these reports and
project files and verifies each rating (or rerates it as ap-
propriate) to ensure that evaluation standards are ap-
plied consistently throughout IFC. The results described
here comprise 22 projects in the transport sector eval-
uated from 1996 to 2004, which is a representative
sample of approximately 50 percent of the 43 qualify-
ing investments approved by the Board between 1990
and 1999 and subsequently disbursed. Qualifying in-
vestments are those made in new or follow-on projects
and exclude restructurings.
3. Note that investment outcome is a measure of
gross profit contribution quality at the level of an in-
dividual investment, is sample-based, and therefore
does not signify overall portfolio profitability. As is
common for any investment portfolio, the overall prof-
itability of IFC’s investments in transport is driven by
large gains or losses on a small number of investments.
4. The performance differences that are remarked
on in the text are statistically significant to at least the
5 percent level, even based on the relatively small sam-
ple of evaluated transport projects. Some caution
should be exercised, however, in quoting success rates,
given that a change in the rating of one project would
account for an approximate 5 percent swing in the
overall success rate.
5. Net profit contribution includes that from in-
vestments committed before 1990 that were active at
some point in the period fiscal 1990–2005.
Appendix E
1. The transport “anchor” acts as secretariat to and
supports implementation of the work program of the
Transport Sector Board. Its specialists also provide op-
erational support to transport staff.
169
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IEG PUBLICATIONS

Study Series
2004 Annual Review of Development Effectiveness: The Bank’s Contributions to Poverty Reduction
Addressing the Challenges of Globalization: An Independent Evaluation of the World Bank’s Approach to Global Programs
Agricultural Extension: The Kenya Experience
Assisting Russia’s Transition: An Unprecedented Challenge
Bangladesh: Progress Through Partnership
Brazil: Forging a Strategic Partnership for Results—An OED Evaluation of World Bank Assistance
Bridging Troubled Waters: Assessing the World Bank Water Resources Strategy
Capacity Building in Africa: An OED Evaluation of World Bank Support
The CIGAR at 31: An Independent Meta-Evaluation of the Consultative Group on International Agricultural Research
Country Assistance Evaluation Retrospective: OED Self-Evaluation
Debt Relief for the Poorest: An OED Review of the HIPC Initiative
Developing Towns and Cities: Lessons from Brazil and the Philippines
The Drive to Partnership: Aid Coordination and the World Bank
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The Effectiveness of World Bank Support for Community-Based and –Driven Development: An OED Evaluation
Evaluating a Decade of World Bank Gender Policy: 1990–99
Evaluation of World Bank Assistance to Pacific Member Countries, 1992–2002
Financial Sector Reform: A Review of World Bank Assistance
Financing the Global Benefits of Forests: The Bank’s GEF Portfolio and the 1991 Forest Strategy and Its Implementation
Fiscal Management in Adjustment Lending
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India: The Dairy Revolution
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Investing in Health: Development Effectiveness in the Health, Nutrition, and Population Sector
Jordan: Supporting Stable Development in a Challenging Region
Lesotho: Development in a Challenging Environment
Mainstreaming Gender in World Bank Lending: An Update
Maintaining Momentum to 2015? An Impact Evaluation of Interventions to Improve Maternal and Child Health and Nutrition Outcomes in Bangladesh
The Next Ascent: An Evaluation of the Aga Khan Rural Support Program, Pakistan
Nongovernmental Organizations in World Bank–Supported Projects: A Review
Poland Country Assistance Review: Partnership in a Transition Economy
Poverty Reduction in the 1990s: An Evaluation of Strategy and Performance
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Power for Development: A Review of the World Bank Group’s Experience with Private Participation in the Electricity Sector
Promoting Environmental Sustainability in Development
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Reforming Agriculture: The World Bank Goes to Market
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